Custom baskets are most easily explained as collections of securities selected to meet specific investment criteria. Unlike generic funds,they offer greater control, aligning investments closely with strategies, risk tolerance, and market outlook.
Personalized Investment Strategies: Whether targeting growth, income, or risk management, these baskets allow investors to tailor their strategies to their specific goals.
Enhanced Risk Management: By selecting individual securities to better manage and mitigate risks, investors can exclude sectors or companies that don't fit their profile.
Client's Challenge: Gaining Analytical Insight
A client was interested in custom baskets for diversified exposure but lacked the tools to analyze all components and their correlation with existing investments. They needed detailed insights to make informed decisions about which custom baskets were good investments.
Step 1: Analyzing Client Needs
We began by understanding the client’s investment objectives, risk tolerance, and market outlook through detailed discussions and analysis. This step was crucial in designing a solution that aligned with their specific needs.
Step 2: Implementing Look-through Analytics
Our solution focused on providing look-through analytics to analyze and understand the individual components within the baskets. This included:
• Component Identification: Listing and describing all individual securities within the basket.
• Performance Analysis: Providing insights into the performance of each component, including returns, volatility, and other relevant metrics.
• Risk Assessment: Evaluating the risk of each component and the basket as a whole, focusing on diversification benefits,asset correlation, and overall risk profile.
Step 3: Comparing Investment Options
With detailed analytics, the client could now compare different custom baskets and their alignment with existing investments, empowering them to identify which custom baskets provided the best return potential while managing risks effectively. This allowed them to make informed decisions on how to integrate these baskets into their broader strategy.
These custom-developed look-through capabilities also allow for a detailed understanding of how various investments intersect. By analyzing the individual components within a custom basket, the client can compare these holdings to other investments, such as ETFs in their portfolio. This transparency enables them to determine the exact overlap between a custom basket and an ETF, helping them avoid redundancy and ensure better diversification. These insights are crucial for optimizing investment strategies and achieving more balanced, risk-managed portfolios.
Our analytics enabled the client to transform their investment approach by providing the necessary insights to make better decisions. This not only enhanced their portfolio performance but also ensured that their investments were aligned with their overall risk tolerance.
The success of this client solution is a testament to the significant value added by bespoke investment technology. As advanced technology and data analytics become more accessible, creating and managing custom investment solutions will increasingly benefit managers, regardless of their tech budgets. At Kiski, we are committed to democratizing access to top-tier technology, ensuring that all asset managers and investors can leverage sophisticated tools and insights to optimize their portfolios and achieve superior performance.
