Our cloud-based, quant robo is our solution to control emotions and risk and to offer capital growth and income with low equity correlation and low beta. Our algo involves three main quantitative mechanisms:
- Target volatility at the portfolio level
- Apply a momentum filter to all asset classes
- Size positions based on volatility – not “expected returns”
By targeting volatility at the portfolio level, we aim to target risk first, and then accept the return the market gives us for that level of risk taken. In contrast, most investors target expected returns first by deciding how much to allocate to stocks – but then have to accept the total volatility exposure that the market dishes out. The difference is not subtle and should not be underestimated.
Fig. 1. How we control risk targeting volatility at the portfolio level.
Learn more here.