Automated Solutions
We use AI to automate portfolio management.
Successful portfolio management requires time, knowledge, and discipline. You have to have the time available every day to analyze information about the markets. You have to have the knowledge to know what to do with that information. And you have to have the discipline to not make any emotional or irrational decisions.
Not everyone has the bandwidth to stay on top of their portfolios, and that's ok — alphaAI is the solution. We automate key portfolio management functions so you can spend less time worrying about the markets and more time enjoying your life. Every single one of our solutions helps enhance your returns over those of a traditional buy-and-hold strategy.
Automated Downside Protection
We manage market exposure to maximize returns during favorable conditions and reduce losses during periods of uncertainty. In 2022, we have saved clients more than 5% in losses with 30% less risk compared to the S&P 500 — that's more than $5,000 saved in a $100,000 account.
TL;DR
Market exposure management helps reduce losses and enhance returns.
Example time.
Market exposure refers to how much capital you have invested in the market. For example, if you had a portfolio of $100,000 and 80% market exposure, you would have $80,000 invested in stocks/ETFs and $20,000 held in cash.
In an ideal world, you would want to increase your market exposure when the market is likely to go up and decrease exposure when the market is likely to go down. That's the idea behind our automated downside protection solution.
The chart on the right shows real (not simulated) data from our Sigma strategy. The indexed values of Sigma and the S&P 500 (left axis) are overlayed with Sigma's market exposure (right axis).
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From January 1, 2022 to June 18, 2022, the S&P 500 fell 20.1%.
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During this time period, our models decreased Sigma's market exposure from 90%+ to an average of 48%.
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This significantly reduced our losses and led us to outperform the S&P 500 by 8.4%.
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From June 25, 2022 to August 15, 2022, the S&P 500 gained 8.3%.
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During this time period, our models increased Sigma's market exposure to an average of 88%.
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This allowed us to maximize our gains and outperform the S&P 500 by 0.3%.
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Automated Downside Protection Track Record
From a Real Account (NOT Simulated)
Automated Risk Management
We adjust risk levels in response to market conditions. When conditions are uncertain, risk is reduced to minimize losses. In some instances, we buy an inverse ETF to profit from market declines. When conditions are ideal, risk is increased to maximize gains.
TL;DR
Risk, when managed properly, can help you profit from both up and down markets.
Example time.
In investing, risk and return are positively correlated. All else equal, a riskier portfolio carries a higher potential return than that of a less risky portfolio. However, a riskier portfolio also has a higher chance of loss.
The consensus in passive investing is for investors to pick a level of risk they are comfortable with and stick with it over the long-term. However, this one-dimensional approach leaves a significant amount of money on the table.
In an ideal world, risk levels should change depending on market conditions. When conditions are suboptimal, risk levels should be decreased to minimize losses. And when conditions are optimal, risk levels should be increased to maximize gains.
That's precisely the idea behind our automated risk management solution. We automatically adjust risk levels based on market conditions. The chart on the right shows our Pi strategy vs. the S&P 500:
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Poor market conditions (pink shaded areas):
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Pi gained exposure to an inverse ETF to profit from market declines.
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- Uncertain market conditions (blue shaded areas)
- Pi adopted a conservative risk profile to minimize losses.
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Normal market conditions (purple shaded areas)
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Pi took on a moderate, well-balanced risk profile.
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Ideal market conditions (green shaded areas)
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Pi assumed an aggressive risk profile to maximize gains.
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Pi Simulated Results
Automated Portfolio Diversification
As the saying goes, don't put all your eggs in one basket — and it's no different in investing. We diversify your portfolio across a wide variety of sectors, industries, market-caps, and other factors to reduce your risk and help you weather whatever the market throws at you.
TL;DR
Diversification makes your portfolio more resilient.
Example time.
In investing, unsystematic risk refers to risk that is specific to a company or industry. Unsystematic risk can be reduced or even eliminated through diversification.
For example, let's say you have $100,000 and invest 100% of your portfolio in Netflix (NFLX). If an event happens that affects NFLX directly (e.g., the company misses earnings) or an event occurs that affects the broader tech industry in general (e.g., regulatory action), then your portfolio would be significantly impacted. Suppose such an event causes a 20% drop in NFLX's share price. In this case, you would lose $20,000 — ouch!
Now let's say that you have a well-diversified portfolio, where NFLX only represents 1% of your holdings. In this case, you would only lose $200 compared to $20,000 — much better!
Each and every one of our strategies is well-diversified to significantly reduce risk and avoid the scenario described above. The chart on the right shows a portfolio breakdown by sector of our Sigma strategy.
Sigma Portfolio Composition Example
From a Real Account (NOT Simulated)
Automated Asset Allocation
We allocate more capital to assets that have a higher probability to perform well and less to assets that have a higher probability to perform poorly.
TL;DR
Asset allocation helps maximize your gains and reduce losses.
Example time.
Asset allocation refers to the practice of adjusting the percentage of each asset in an investment portfolio according to the investor's goals. In our case, the assets are stocks/ETFs and our goal is to maximize your risk-adjusted returns.
In an ideal world, you would want to allocate more capital to the stocks/ETFs that will outperform the market and less to those that will underperform. That's the idea behind our automated asset allocation solution.
The chart on the right shows real (not simulated) data from a real account. One of the ETFs that this account holds is the Vanguard Consumer Discretionary Sector ETF (ticker: VCR). The chart shows the price of VCR (left axis) overlayed with the percentage of the portfolio that is invested in VCR (right axis).
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From September 13, 2021 to January 24, 2022, this account's average exposure to VCR was 14%. That is to say, VCR comprised 14% of this account's portfolio.
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From January 25, 2022 to September 30, 2022, the S&P 500 lost 15%. In the same time period, VCR underperformed the S&P 500, declining by more than 19%.
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Our models reduced this account's VCR exposure from 14% to 6%, which limited our losses and helped us outperform the market.
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Automated Asset Allocation Track Record
From a Real Account (NOT Simulated)
