All Weather US - Unleveraged
Why this Kristal? The All Weather portfolio philosophy is to create a portfolio that is able to generate a return equivalent or in excess of broad GDP growth over an extended period of time. It brings together investment in 3 main Asset Classes: Fixed Income, Equity and Commodity. The weightings between these 3 asset classes determine the success of the strategy. A broad guidance that has been tested over time is an allocation of ca. 55% to Fixed Income split between medium and longer term bonds, 30% Equities and 15% commodities. The portfolio will perform based on the assumed correlation between different asset classes. Strong economic growth will support equities and commodities but at the expense of fixed income. In a recession, rates trend lower and since lower rates mean higher prices for bonds, the gains of this section of the portfolio will mitigate losses from a slump in equities. In an inflationary scenario, which is hurtful for both equity and fixed income, the commodity allocation will act as a buffer to negative impacts from both markets. We have further refined our strategy by including inflation linked bonds as part of the allocation in the fixed income space. Recommended for: Ideal for investors looking to gain a diversified exposure to various asset classes with the objective of balanced growth. Geographic Focus: US Market Tier Exposure: Developed Markets Asset Class: Fixed Income, Equity, Commodity When to buy? The Kristal provides consistent performance through most market conditions. It is therefore ideal in times of economic uncertainties. Due to the growth component of equities, the Kristal is also placed well for regular periodic investments. How is this Kristal Managed? The Kristal is regularly rebalanced to maintain targeted asset allocations:
- 55% Fixed income (10% Inflation linked treasuries, 30% Long Duration Bonds, 15% 3-7yr duration bonds)
- 30% Equity (Broad US Market ETF, e.g. S&P 500, Total Stock market ETF, etc)
- 15% Commodities (Gold, and/or broad commodity tracking ETF)
Katalyst
Why this Kristal? Katalyst is a genetic algorithmic strategy that takes a tactical approach to portfolio construction based on the prevailing market conditions. The algorithm assesses a universe of diverse ETFs for various risk and return parameters. The objective of the strategy is to optimise the utility derived from higher returns subject to volatility constraints. The strategy is overseen by an experienced investment committee that reviews the performance of the Kristal on a regular basis and assesses the appropriateness of the risk constraint in any given market scenario. Targeted asset allocation between Fixed Income and Equity is 40-60 with a 15% tolerance depending on Algo inputs Once the asset allocation is obtained, Katalyst invests to take tactical positions at a more targeted level than traditional style-based investing for up to 50% of the portfolio. It enables investors to acquire a low-cost exposure to popular, growing sectors like technology, healthcare, industrials, consumer discretionary that have been characterised by solid risk-adjusted returns. To reap the benefit of diversification, Katalyst also takes some exposure in emerging markets, while any remaining cash is kept invested in short term US treasuries. Recommended for: Ideal for medium-risk profile investors looking for an actively managed strategy that delivers growth via capital appreciation. Geographic Focus: Global Market Tier Exposure: Developed and Emerging Markets Asset Class: Equity, Fixed Income, Commodity Sector:Diverse When to buy? The Kristal performs best in a stable and growing economic environment. How is this Kristal Managed? The strategy is dynamically rebalanced on a monthly basis with discretionary oversight of an experienced investment committee. Sectors are carefully chosen using an algorithm in order to deliver optimal risk-adjusted returns based on a medium-risk growth portfolio. Individual allocation within an asset class is further driven by model-driven discretionary tactical trades. Reference: Genetic algorithm is a concept that is inspired by Charles Darwin’s theory of the process of natural selection. Such algorithms imitate natural biological processes like mutation, inheritance, crossover and selection. Genetic algorithms are especially good at solving optimisation problems. This makes them highly applicable in the field of finance. They can solve the problem of portfolio rebalancing optimization efficiently. Learn more about Genetic Algorithm
