Knowledge Base Articles
Part III - Portfolio Construction - The Real World Analysis
In the third and the final part of our “Portfolio Construction” article series, the findings of the previous sections are applied to a broader and more realistic set of assets to evaluate the performance of the proposed methods against more conventional techniques.
Part II - Portfolio Construction - Sampling & Optimisation
The second part of the “Portfolio Construction”-series explores whether introducing parameter uncertainty to the model would improve the out-of-sample performance of the optimal portfolio. Additionally, the article proposes and tests two adjustments to regular utility optimisation.
Part I - Portfolio Construction - Parameter & Model Uncertainty
There is a number of challenges associated with portfolio construction based on historical data. This three-part article series explores some of the most common issues attributed to the model-based portfolio optimization: the sensitivity to changes in data, large variations in portfolio weights and the bad out-of-sample performance.
Humans, Robots or Cyborgs?
We think Cyborgs will win out in the battle for the hearts and minds of the next generation of wealth customers. Mercifully, no lobotomisation or bionic implants will be needed. Human advisors will be empowered, not replaced by AI fuelled solutions. Consumers will welcome a new generation of services which more holistically meet their demands from financial services. In the end, the robots may take their revenge but until then we should expect tech to continue to be a catalyst for positive change in finance in the years to come.
Leaning Into the Curve of the Pandemic
As well as COVID, the world must now contend with renewed tensions between the world’s two superpowers and the aftermath of the horrific murder of George Floyd. Conditions are febrile, but it is often in moments of maximum uncertainty and duress that lasting, positive change is made. Policymakers are forced to act in the national interest and interventions such as the furlough and the various COVID loan schemes in the U.K. deserve recognition. Nonetheless, few would have predicted a few months ago that 2020 would prove to be such a seismic event, notwithstanding that it’s US election year. Decisions made now will reverberate for years, if not decades to come. We will stay in our lane here and look at how FinTech can support better outcomes as we come out the other side.
Retirement Planning Post COVID-19
Several months into the COVID-19 outbreak, it would be foolish not to expect significant and lasting change to both our economies and our societies in general. What does this all mean for our retirement plans? For those of us who’s jobs and livelihoods are directly imperilled by the crisis, a brass-tacks evaluation of the likely path for our specific roles and industries will, of course, be imperative. For example, those working in the service sector and in the cultural economy, existential concerns are likely to be paramount and pension planning is likely to be a second-order priority. For those of us fortunate enough to come out of the other side (relatively) unscathed we should directly assess the impact of COVID on our retirement plans – such will be its direct impact. As individuals, we frame our retirement by our age and where we consider ourselves to be in our life journey at that moment in time. We need to generalise here so let’s consider the three broadly accepted stages in turn; accumulation, at-retirement and decumulation.
Paradigm Change for Robo-Advice
A multitude of factors can drive paradigm change. Technological innovation, improved methods and changes in demand are all common instigators of change. While all the latter means would be described as evolutionary, the impact of Covid-19 is revolutionising how we live and interact. Out of necessity, we are now deeply engaged with digital services that we hadn’t even heard of a few weeks ago. This digital awakening creates highly fertile ground for the next paradigm in wealth and financial advice. While the first wave of robo-advisory solutions aimed at promoting greater inclusion, the next wave will focus on digitally transforming the products serving traditional channels.