Your client’s risk tolerance score is just the first step toward building a highly customized ETF portfolio. Set the appropriate retirement age. Define the investment universe ArcPoint uses by choosing a mix of equity and fixed income asset classes. Decide whether or not ArcPoint should consider the inclusion of minimum/low volatility ETFs or sector-focused ETFs. For higher income clients, determine whether to use municipal bond ETFs in lieu of taxable alternatives. Select your preferred ETF providers from a menu of ten companies and ensure that our recommended portfolio is aligned with your firm’s commission arrangements.
Do your clients have held-away assets or holdings that can’t be sold for tax reasons? ArcPoint even customizes recommendations for the inclusion of individual equity security, ETF, and open-end mutual fund holdings.
Many portfolio optimizers used by robo-advisory platforms and others are plagued by "garbage in, garbage out" — stale or faulty assumptions ensure that recommendations are anything but optimal. In addition to a robust risk tolerance assessment, we take a sophisticated approach to projections about the long-term expected return, risk and return correlation of each asset class. The asset class assumptions behind ArcPoint update as frequently as warranted by changes in market prices to enable you and your clients to take advantage of evolving markets.
Fundamentals are king over longer investment horizons. Short-term asset price changes are influenced by a myriad of factors and are impossible to forecast, but long-term asset returns are driven by the ability of lenders to service their debts and companies to generate profits for their shareholders. ArcPoint combines algorithms with human expertise to analyze the several thousand public companies held by the ETFs we recommend to determine the likely average earnings each company will achieve over an economic cycle. Companies are then grouped into twelve equity asset classes with distinct primary regions, market capitalizations, and degrees of sensitivity to economic cycles. This aggregation of hundreds of individual company forecasts unlocks the power to forecast real long-run returns for specific equity asset classes. We derive expected return projections for eight fixed income asset classes with similarly robust analytics.
Risk and correlation projections for each asset class are calibrated with an understanding that return correlations spike during periods of market turmoil. As a result, ArcPoint will tilt recommendation weightings toward asset classes with lower risk - appropriate for investors that care first and foremost about preservation of capital.
Show prospects how they can be better invested, and assure clients that their portfolios are appropriate for their degree of risk tolerance, age, time horizon and assets held elsewhere. ArcPoint evaluates existing holdings of individual equities, ETFs and mutual funds. Estimates of projected annual returns, risk and expenses are generated and compared to our recommendations to determine how asset class allocations and individual security holdings should be changed.