The Best-Fit Portfolio feature in Portfolio Intelligence is a powerful tool designed to match clients with the most suitable investment portfolio based on their risk tolerance, current holdings, and optional values preferences.
Note: To load the best-fit model you must designate specific portfolios as models within Portfolio Intelligence. Please reach out to support@yourstake.org for assistance.
Guide to the Best-Fit Portfolio Process
Purpose
The Best-Fit Portfolio process aims to:
- Align client portfolios with their risk tolerance
- Match portfolios based on asset allocation and factor-based analytics
- Incorporate values-based preferences when applicable
Best-Fit Portfolio Selection Process
- Input Selection
- Starting portfolio (current client holdings)
- Risk preference (from Risk Tolerance Questionnaire)
- Optional values preferences
- Asset Allocation Filtering
- Filters model portfolios based on equity/fixed income split
- Narrows down potential matches to portfolios with similar allocations
- Factor-Based Analysis
- Calculates and compares various factors:
- Detailed asset allocation (US Stock, International Stock, Bonds, Cash)
- Security concentration
- Yield
- Geography exposure
- Sector exposure
- Market cap exposure
- Investment style
- Fixed income characteristics
- Calculates and compares various factors:
- Risk Score Matching
- Compares client's risk score to model portfolio risk scores
- Prioritizes portfolios within 5 points of the client's risk score
- Values Alignment (Optional)
- Incorporates values preferences if selected
- Adjusts portfolio selection based on values alignment scores
- Final Selection
- Chooses the model portfolio that best matches the client's profile across all considered factors
Using the Results
- Review the suggested best-fit portfolio with your client
- Discuss any significant changes from their current portfolio
- Use the comparison tools in Portfolio Intelligence to illustrate potential benefits of the recommended portfolio