StrAP: Strategic Asset Planner for RIAs
Empowering investors to increase returns while managing risk
Asset allocation is often mentioned as the most important step an investor can make in projecting returns. Over our years of experience in the financial investing analytics market, we couldn't agree more. With this, the idea for the StrAP: Strategic Asset Planner for RIAs was born. We strove to create a user friendly, valuable, cloud-based product with an innovative flat market scenario calculation that is not found in any other asset allocation program. It allows an investor or fund manager to quickly upload an Excel file and estimate how a portfolio(s) of selected indices will grow over time. This information makes it easy to compare the growth expectations of two portfolios.
Flat Market Projection
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Return Calculation Methods
The index returns can be computed in 3 different ways: a mean reversion method, a conservative non-overlapping method, and a median non-overlapping method.
The StrAP mean reversion method is an average of 10 year over-lapping averages. It calculates the arithmetic monthly average of the previous 120 months (10 years) for every month which has 120 months of previous returns and then takes the average of those averages. It is based on the theory that over time, the returns will revert to their mean.
The conservative and median non-overlapping methods in StrAP essentially calculate the 20 year average, 30 year average, and 40 year average. The conservative method takes the minimum of those 3 averages. The median method takes the middle return of the 3 averages.
Once the averages and standard deviations are calculated, they can be adjusted by the user if the user doesn't believe the numbers represent reality.
When the indices returns and standard deviations have been determined, then the given portfolio's mean return and standard deviation is calculated. A new portfolio can be optimized around the given portfolio's standard deviation to get the highest return for a given level of risk.
Unique Wealth Projection methods not found in any other product
For the wealth projections,StrAP uses an estimated portfolio return. A Monte Carlo simulation with a 1000 trials around the calculated mean and standard deviation is performed. The return at the 50 percentile mark of the normal distribution of the 1000 trials is selected. The 10 percentile and 25 percentile returns are also utilized for the flat market scenario.
We run two scenarios of wealth projections for both the current asset allocation and proposed asset allocation. The first scenario is a standard scenario whereby we assume every year will show the average growth we obtained from the simulated 50 percentile return. The other scenario assumes that at some point the market will experience a bad year followed by five slow years. We use the 10 percentile return for the bad year, and the 25 percentile return for the slow years.
The flat market scenario can show the dangers of a risky portfolio with a larger mean return. This is a completely unique calculation that sets StrAP: Strategic Asset Planner for RIAs apart from the competition. During normal years, risky portfolios can look great, but they can also really punish an investor during bad years and flat years. Our flat market scenario will expose this risk to the investor.
"Doldrum's" Wealth Simulation Chart
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Client Upload Template
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Easy to Use
StrAP: Strategic Asset Planner for RIAs requires no downloads or installation of software on your computer. It features a client upload template that will give you the ability to supply the source data. We provide a secure web hosted software application for file comparisons. Your data is safe and secure in our SAS70 II data center. All communication between your PC and the application is encrypted* by utilizing a secure 128 bit SSL Internet protocol. This security covers all site navigation and file uploads and downloads.
We provide support by encouraging you to either call or email Roger Chaillet with questions, or to sign-up for a free webinar. Roger can be reached by phone at (469) 429-1290 x 224 or by email at email@example.com.
Our weekly webinars are designed to provide you with a better understanding of our reporting system and multi-factor analysis.
Free Weekly Webinars (3:15 PM CST)
- Tuesday - Peer Group Universe Reports
- Wednesday- Board Quality Reports
- Thursday- StrAP: Strategic Asset Planner for RIAs