The term institutional-grade refers to the level of complexity involved in portfolio construction. Traditionally, investing using these techniques has only been available to qualified investors and financial institutions.
At Allio, our goal is to make institutional-grade portfolios available to everyone. Here’s what goes into our portfolio construction:
We use a range of empirically-validated forecasting techniques across asset classes, complemented by machine learning.
We incorporate signals based on the current secular market regime.
We understand that correlations between asset classes are not static. We use probabilistic correlations in our portfolio construction.
We use a diligent distributional measure of risk which allows us to subject our prospective portfolios to various downside scenarios in an effort to make them more resilient should those scenarios play out. (This type of downside risk modeling is highly advanced and very atypical in the robo-advisor space.) Our goal is to achieve a high degree of risk-return efficiency, rather than focusing on a single metric such as return.
We strive to use the most liquid, lowest cost ETFs for each exposure in our portfolios.
We incorporate tactical information in our portfolios to complement our strategic tilts.
We use a multi-asset approach to gain exposure to broader markets — our portfolio construction goes well beyond basic stocks and bonds to also include alternative assets such as real estate, emerging markets, energy, crypto, and gold.