The Optimiser tool is an innovative tool designed to provide suggestions to align investor portfolios to their risk profiles and objectives.
To use this tool, a portfolio will have to be selected by Portfolio Director. As long as this portfolio possesses at least 5 separate security holdings, the Optimiser tool will be available as a tab near the top of the page.
To ensure the Optimiser works correctly, please ensure that the appropriate Investment Profile has been selected. New users will have to create a new Investment Profile.
Investor Profile
The Investor Profile screen allows selection of the appropriate investment objectives:
- Growth Focus - increase portfolio value through share price appreciation.
- Income Focus - receive a steady stream of distributions.
- General Focus - other objectives, like low volatility or no bias towards growth or income.
This objective can be further refined to better account for more specific risk and return profiles. e.g. 'Aggressive - Growth Focus'. A short description is provided to aid selection.
The Use Profile button will apply this profile and further refinements in the optional Advanced Investor Profile screen.
Advanced Investor Profile filter
The next screen allows investors to add advanced requirements to their Investor Profile, allowing the Portfolio Optimiser to tailor a portfolio for specific investors better.
As part of their investment strategy, Trend sensitive investors may also want to exclude stocks that are in a bearish or breached condition on our SDMAX or SD30TSR technical indicators. (Click here to view Lincoln’s Investment Strategies whitepaper)
Lastly, investors can also exclude industry sectors they don't wish to invest in for ethical reasons, personal reasons or think there’s a negative outlook.
Clicking the Apply button will generate the results.
My Current Shares
This panel displays the current portfolio and allows investors to 'lock' specific holdings. Locking these holdings ensures portfolio optimisation suggestions are provided to understand that these holdings will not be altered.
The status of different company holdings are also displayed:
Green: The company fits within the profile selected
Amber: Though the company does not meet the properties of a stock within the selected profile, however, it is still a Stock Doctor preferred company
Red: The stock does not meet the selected profile, nor is it a preferred company. Action may be needed.
Lock function
There may be stocks that you wish to exclude from the optimiser process. Clicking on the lock icon located in the 'My Current Shares' section will ensure you do not receive alerts for that company being out of alignment for the objective selected, nor will a red dot appear in the status area (as above next to APX)
Though it is removed from the alert process, the Optimiser still recognises that you hold the stock and will provide optimised suggestions that account for this.
Optimised Suggestions
This panel displays a list of stocks to optimise an investor's portfolio with their investment profile. Investors can make adjustments to their preferences through several functions:
- View additional suggestions via the '>' button.
- Allow up to 3 companies to be compared via the checkboxes and 'Compare' function. Please see Compare for more information
- Provide the ability to add suggested companies from the list via the '+' button.
The optimised suggestions are selected due to the appropriateness of the stock to the profile selected and its ability to align the portfolio given the current holdings within a portfolio.
Optimiser suggestions are in listed in order of preference considering their impact on their impact on portfolio risk.
Clicking on the '+' symbol will add the stock to the 'Optimise my shares' section (refer below)
** The Optimiser doesn't include short positions; it only includes ordinary security holdings.
Optimise My Shares
In association with the Optimised Suggestions panel, 'Optimise My Shares' will display a combination of both an investor's current portfolio and added suggestions from the Optimised Suggestions panel. Notably, the '-' button allows investors to remove the respective stock holdings from their optimised portfolio.
This panel allows investors to easily change the weightings of their portfolios to take advantage of the optimised suggestions provided. This is done by altering the weighting (%) and Total capital to invest at the top of the panel.
Total capital to invest will default to the current total value. When this is changed, all amounts (except those locked) will be recalculated.
Once the investor is comfortable with their optimised portfolio, clicking on the 'View Orders' button will display the appropriate transactions to implement this optimised portfolio.
View Orders Button
Will bring up a popup that contains the buys and sells necessary to reach the optimised position.
By default, trades under $1,000 will not be selected. However, the user can select these manually.
The total will update as you check and uncheck boxes in the selected column.
You can print the selected optimised transaction by clicking on the Print button at the bottom right-hand corner.
Weight Evenly Button
Will divide the unlocked percentages evenly. E.g. In the image below, $639 of the $9,195 (i.e. 6.95%) is locked to AFI, so the Weight Evenly button would allocate the remaining 93.05% evenly to BTT, CAR, CCP, CHC and CTD, giving them 18.61% each. It rounds downward to 2 decimal places, so it might not quite reach 100%.
The Reverse Changes button will undo all changes.
Refresh Button
Once you have made changes to the "Optimise my shares" area, for example, you have removed some stocks, re-balanced the portfolio or added new stock, and you are then able to click "Refresh" under the 'Optimised Suggestions' to have the list of Optimised suggestions refresh, which recalculates the suggestions accounting for the newly removed/added stocks.
It will take into account all the hypothetical changes you have made to the portfolio and then come up with a list of new suggestions based on how the portfolio would look if you actually made the changes.
** It is important to note that the "Optimise my shares" area is a workbench for analysing the impact of potential changes. No changes will take effect until you actually complete your trades via your broker and you enter those details into the Portfolio Manager.
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