Horizons ETFs Management (Canada) has launched the Model Portfolio Builder, a customised exchange-traded fund portfolio development solution for Canadian investment advisors that focuses on keeping client risk constant.
Developed by Toronto-based PŮR Investing, the Model Portfolio Builder allows advisors to tailor ETF portfolios for their clients based on calculating each client’s unique ‘risk number’ — a metric that encompasses risk tolerance and Know-Your-Client requirements.
Regardless of market conditions, the tool uses PŮR’s technology to keep the Model Portfolio’s risk number or risk tolerance constant, a technique used in institutional-calibre investing.
“When you have a family of 71 ETFs, a question you get asked a lot by clients is ‘What is the best combination of ETFs for my portfolio?’ Our Model Portfolio Builder helps provide advisors with answers,” says Howard Atkinson, president of Horizons ETFs. “To build better ETF portfolios, clients need a stellar risk manager. No one is more qualified to provide this guidance than Mark Yamada and the team at PŮR Investing, the global innovators in how ETFs can be used to build institutional-calibre portfolios.”
Horizons ETFs originally launched Model Portfolios in January 2013, a suite of modelled ETF portfolios that use the constant risk investment strategy originally developed by PŮR. Each of these ETF portfolios has an assigned risk number that suggests a maximum potential drawdown (or loss) over a 12-month period with a high degree of probability; it also includes the minimum return of capital plus inflation over the investment time horizon. These ETF portfolios dynamically reallocate assets on a quarterly basis to ensure that their risk profile remains constant, regardless of market conditions.
“We developed Horizons ETFs’ Model Portfolio Builder to provide advisors with a more customised approach to constant risk management for their clients, as well as better prepare them for the CRM 2 environment,” says Mark Yamada, founder and CEO of PŮR.
Phase two of Model Portfolios — Horizons ETFs’ Model Portfolio Builder — takes the initial launch of Model Portfolios to the next level. Rather than using pre-assigned risk numbers, Model Portfolio Builder allows advisors to calculate a unique risk number for each of their clients and develop a customised model portfolio of ETFs.
“Adjusting a portfolio’s asset mix according to risk levels is a dynamic asset allocation strategy that institutional managers have been applying to their portfolios for years,” says Atkinson. “The advent of Horizons ETFs’ Model Portfolio Builder allows advisors to access this type of technology free of charge to help them and their clients achieve their investment goals.”