Strategy In-Depth
For a general overview of our investment process, please visit the Process & Strategy section. The pages within QuantStreet In-Depth explain certain technical details of our strategy. The content in this section may be most relevant to professional investors and asset managers.
Components of Portfolio
QuantStreet’s process provides a systematic approach to ETF selection, resulting in a highly-diversified portfolio. We invest in ETFs that track US stocks, international stocks, and government and corporate bonds.
Portfolio Construction Process
A machine learning algorithm creates asset return forecasts based on market, fundamental, macroeconomic, and text data. The forecasted returns are then fed into a portfolio engine which generates the portfolio with the highest return at each level of risk. We choose a risk level based on your risk tolerance and our assessment of market and economic conditions, and then vet the model-generated portfolio to ensure it reflects important information about the markets and economy that may not have been captured by the model.
Optimal Portfolios by Risk Level
Here we present an illustration of optimal portfolios for each potential level of risk. An important step in our portfolio selection process is to choose a targeted risk level and then analyze the model’s suggested optimal portfolio at that risk level.