Tag Archives: Performance

How to understand the figures of my portfolio to obtain better results? (I)

It sounds very nice when you think that you have your own investment portfolio. It is an important step to improve your finances and get your goals. The question is that a portfolio has its own life since its inception and your responsibility as investor is guiding the portfolio to your interests. What are the signals that you have to follow?

Well, there are many figures and parameters to measure the quality of your portfolio, but we will select the main ones in order to get the most important data:

  • The performance evolution: the figure alone is not enough, because it has to be put in comparison to others. We recommend comparing it with the smart benchmark. This comparison provides the view to understand if we have chosen the right assets or not. For instance, this example shows that we are far from the benchmark and there is a wide improvement to manage.

portfolio performance in T-Advisor

  • The weight of the assets in your portfolio: it is also relevant to understand the allocation. If we have a concentration in a country or a sector, there is a high risk to suffer from instability, if the trend changes. Diversification reduces risks, but we can have some assets with lower returns. A good analysis can help us look for similar assets with better figures in order to rebalance the portfolio.

weight of assets in a portfolio

  • The relationship between performance and volatility: first of all, volatility does not mean necessarily more risky, as we have already commented. However, we can understand the connection between performance and volatility through the Sharpe ratio. This figure shows how profitable an investment is related to the historical volatility. The higher the ratio is, the better the investment is… but this idea is not totally right if we do not compare two assets. You can find two assets with similar ratios but with different figures. We have to look into the numbers to understand if it has a high performance with a high volatility.

Portfolio sharpe ratio

There are some other figures that we will soon comment.

T-Advisor implements the bootstrapping tool for your portfolios

T-Advisor does not stop improving the platform and providing professional advanced tools for individual investors in an accessible and easy way. This is the new case: our bootstrapping tool.

What is bootstrapping? It is a statistic complex calculation, which is possible to make due to the current computing capacity. This calculation provides an estimation of different results with the probability that it happens, taking into account the past evolution. We apply it to calculate projected returns, also known as forward testing.

Think about your portfolio. As investors, we are sometimes doubtful and impatient. We would like to know how my portfolio would evolve. We are not a kind of psychics or fortune tellers. On the contrary, we are very scientific. Our bootstrapping tool does not provide the certain results, but the possibilities that your portfolio performs in different ranges.

If you log in T-Advisor and choose one of your portfolios, you have just to click on the “bootstrapping” button. You can select the number of trays and years you would like to test with a 95% of statistical confidence. With a simple click, you obtain:

  • The performance simulation for the time frame you have chosen. It displays the maximal possible loss, the time to breakeven and the evolution of the possible good, expected and poor results.

Bootstrapping performance simulation in T-Advisor

  • The cumulative returns distribution that explains the possibilities (in %) to obtain a specific range of returns.

Bootstrapping cumulative returns distribution in T-Advisor

  • And the cumulative returns in a selected year with the probability that it happens.

Bootstrapping Cumulative returns in T-AdvisorThe bootstrapping tool is very useful to detect possible negative evolutions of your investments. The screens helps you make changes and rebalancings in your portfolios to improve your results. As we insist, it is a statistic analysis and provides projections that will change depending the modifications that you include in your portfolio.

T-Advisor has also implemented the bootstrapping tool to make forward testing in shares, funds and ETFs. We will write soon about it.

What market opportunities do we post and why?

T-Advisor, your suite for self-directed investment management, has a module to help investors find new ideas to improve their returns. These “Investment ideas” has a list of market opportunities from exchanges around the world that our algorithm selects and update every Monday. That is why we post every week a selection of them, but what criteria do we use to choose you some of them?

First of all, we look into all the markets to find what stocks have been selected. The screen shows initially just some figures from the securities of each market. We take into account the trend. We opt for the ones with bullish trend and with less than 1% slope. Why? Because we prefer stable and progressive increases instead of sudden ones which makes the security more volatile.

Market opportunities screen in T-Advisor

The selection keeps on checking several figures in the T-Report:

  • The liquidity grade: it has to be higher than 5
  • The score: it has to be also higher than 5 or 6
  • The performance: it has to be positive in the year and show also a positive figure in the last year, to confirm that the stock did not suffer a strong variability.

T-Report screen with liquidity, score and performance

Finally, we also look the 1-year chart. We avoid charts with strong variations or sudden jumps upwards. We prefer steady positive trends to avoid high risks. You can find the difference clearly in these charts:

Chart with low slope in T-Report

Chart with high slope in T-Report

We consider that investments should be for a long-term. Trading is also a possibility for investors. We are not critical with it, but we prefer a more stable model. That is why our weekly proposals tend to be bets for that idea. Of course, markets change daily, but it does not mean that investors have to react immediately to every event. Portfolios should tend to be stable and include changes when your goals and risk profile change, because you evolve also as investors, or when your securities do not play a positive role anymore. That is why it is relevant the long-term view. That avoids sudden changes… and mistakes guided for the moment.

Investor: watch these figures to select your assets

You are a new investor or with low experience in investments. You have available a good database to check possible asset to invest in, but which would be the right one? How can you select the most interesting assets for your goals? We recommend you to look into a database with high-quality reports about the assets. There you will find lots of information. Check the following figures to take a decision:

Figures to follow in investments

  • Performance: look at the historical performance. How good were the returns in the last months? And in the last years? It is true that past performances do not guarantee future results, but it show a trend about the long-term stability. It is not the same to get a share with positive and negative returns in different years than a one with regular positive returns.
  • Volatility: this is quite important. Volatility measures a deviation from a middle point. For instance, if the price goes up 4% one day and goes down 3% the following, the security is quite volatile. On the other hand, if the price goes up 0.2% three days and goes down 0.1% one day, it is less volatile. Take it into account depending your risk profile: if you are risk averse, you will not feel comfortable with a share that has high variations every day.
  • Trend: it is the development of a security in a timeframe. You have to consider the recent trend to decide to invest or not. A trend has a slope. If the slope is strong, it means that the trend has accelerated. For instance, if the slope is strong upwards, it can mean a bubble or that there is speculation behind the movement. On the other hand, if is very negative, it can mean a crisis in the company.

Chart to follow investments

  • A historical chart: an image is worth more than a thousand words. It is easy to detect the items mentioned above in a chart. The best one is an active chart where you can choose different timeframes.
  • Value at Risk (VaR): this is an advanced item, but very useful. What does it measures? The probability of losses in a timeframe. You will read “VaR one week” or “VaR one year”. It indicates that you can lose at maximum the written figure with a 95% probability. In other words: if you invest in that asset, you can earn, you can lose less than the indicated figure in the VaR, you can lose at maximum that figure with 95% probability and you can lose more than that maximum with 5% probability. These are the scenarios that you have to analyze. The highest VaR it is, the highest risk you accept.

This is the beginning. There are some more that we will comment in future posts. The T-Report in T-Advisor offers all these data. Check it in our platform.

Discover the new improvements in T-Advisor

T-Advisor is a suite of advanced and professional investment tools for individuals and advisors. As a technological solution, our team is always working to improve features and usability. We know that perfection is impossible to reach, but we work as it isn’t, so that our users could not find any other better solution than ours.

What are the main last improvements? Firstly, the performance chart in your portfolio. You can choose the period to compare your portfolio with the smart benchmark and you can also select another chart to see the portfolio valuation.

T-Advisor improvements: performance chart

Portfolio performance chart in T-Advisor

T-Advisor portfolio valuation chart

We have also improved our list of assets, setting categories to find the ones you are looking for. The list has deeply grown: 41 world stock indexes, more than 100 international fund managers, 20 exchanges, as also bonds, certificates and currencies.

T-Advisor asset list

We have also implemented a new module: our investment planner. We proudly announce this implementation, as we have set an easy-to-use tool: up to 7 different plans (from housing to retirement) and advanced settings to take into account inflation and tax effects. At the end, you obtain a report with a suggested allocation depending your profile and a capital projection for the selected period of investment.

T-Advisor investment planner home

T-Advisor investment planner projection

In our version for professionals, the upgrade focused in the usability to manage clients and the performance figures related to their investments.

This is not the end. T-Advisor is steadily working to develop new features and settings and include a better usability. Our aim is that our users feel totally satisfied managing their investment with us. So many tools just for 0€? Of course! Please enjoy them!

Alpha and beta: Greeks in my portfolio

Two main concepts in the modern portfolio theory are the alpha and beta measures. They give the investor some information about the asset (a share, a fund, an ETF, for instance) risk compared with its benchmark, but both are quite different.

alpha y beta in T-Advisor

f we take our T-Advisor screen and choose an asset (for this case, Vestas Wind System), the T-Report from it has a chapter titled “Relative performance vs index”. We already wrote about  correlation. Now, let’s explain what alpha and beta are and why they are important references for investors.

Alpha shows the outperformance of the asset compared to its benchmark for an assumed risk. In the picture, the figure is 0.0197. That means: this asset performs better than the reference index. The higher, the better. This additional performance has to do with other reasons not linked with the benchmark. This measure appears also for funds and portfolios. A way to discover if the fund manager is good is just looking the alpha.

What about beta? In this case, this figure measures the volatility or how much the asset varies in its price when the benchmark moves up or down 1%. If it is positive, the asset varies in the same direction as the benchmark. If it is negative, the variation is the opposite.

For instance, in the example above, beta is 1.27. This means that the asset is more volatile than the index: when the index changes 1%, the asset does 1.27%. If the ratio would be less than 1, that means that the asset has a low volatility.

This is the theory, but what about the practice? Just remember some ideas:

  1. Look for positives alphas but beware the beta together, because beta points how much risk you are accepting.
  2. For bullish markets, look for assets with high positive betas.
  3. On the contrary, for bearish markets, choose low or negatives betas. In this last case, the correlation is inverse.

In all cases, the investor is choosing the risk exposure. T-Advisor provides the figures. How much you are exposed is a question of your own decision.

T-Advisor ranking: the best in Q1

How was the first quarter of the year for your investments? T-Advisor publishes its ranking with the best stocks in the main world indexes taking into account its score. T-Advisor score is a specific tool developed by our company. It is calculated combining several ratios, mainly performance and risks.

New York Dow Jones Industrial Average has the following best stocks ranked by our score:

Score

Perf. Q1

Volatility

VaR day

VaR week

Walt Disney

9.4

6.76%

18.17%

-1.84%

-3.11%

Du Pont de Nemours

8.85

4.29%

17.07%

-1.85%

-3.52%

Unitedhealth

8.6

8.68%

19.54%

-1.96%

-5.07%

American Express

8.3

0.48%

18.51%

-1.97%

-4.95%

Microsoft

8.26

10.71%

26.28%

-2.13%

-5.45%

The ranking shows the richness of the American economy: there are companies from very different branches, as cinema, technology, health, finances or chemicals.

FTSE 100 in London has the following best stocks ranked by our score:

Score

Perf. Q1

Volatility

VaR day

VaR week

Weir Group

9.81

17.57%

25.55%

-2.77%

-4.34%

Bunzl

9.76

10.77%

14.16%

-1.34%

-2.30%

Kingfisher

9.73

11.80%

22.44%

-1.92%

-4.35%

Whitbread

9.65

12.87%

19.21%

-2.08%

-3.30%

Next

9.22

22.56%

16.81%

-1.54%

-2.22%

Surprisingly, the best scores in London are linked to companies from retail, consumer and essential supplies.

DAX 30 in Germany has the following best stocks ranked by our score:

Score

Perf. Q1

Volatility

VaR day

VaR week

Infineon Technology

9.87

13.71%

27.19%

-2.65%

-6.11%

BMW

9.63

8.06%

25.70%

-1.93%

-5.26%

Continental

9.22

10.79%

23.87%

-2.32%

-6.20%

Lanxess

8.75

14.03%

31.61%

-2.96%

-8.27%

Daimler AG

8.22

10.89%

27.41%

-2.30%

-5.88%

German technology, chemicals and car branches are at the top of our ranking.

IBEX 35 in Spain has the following best stocks ranked by our score:

Score

Perf. Q1

Volatility

VaR day

VaR week

Jazztel

10

41.85%

22.22%

-2.05%

-3.72%

Grifols

8.66

15.80%

22.24%

-2.32%

-4.90%

Grupo Ferrovial

8.62

12.94%

19.71%

-1.65%

-5.16%

Bankinter

8.31

19.33%

33.46%

-3.44%

-7.30%

Red Eléctrica

8.14

21.87%

23.32%

-1.74%

-4.52%

In Spain, Jazztel is at the very top profiting the consolidation in the telecommunication branch in this country. The performance of this share anticipates a possible merge with other company.

Portfolio optimizer: a tool to improve your investments

Investors organise efficiently their portfolios to obtain the highest returns, but a portfolio has to be followed up, because some adjustments are sometimes necessary. The problem is how to detect the best changes to get the profit goals. That is why T-Advisor developed the tool “Optimizer” for this target.

Optimizer T-Advisor

In the Optimizer, the investor can choose the expected return and volatility depending the term (shorter or longer), as the percentage of acceptable volatility and the weight limits per assets. Clicking on the “optimize” button brings the results.

From the beginning point and the chosen settings, the tool calculates different parameters. The efficient frontier is a visual comparison between the current position and the optimal one, linking volatility and performance. The investor can also learn which assets should be changed in their weight to optimize the returns.

At the end, investors have a helpful tool to adjust their portfolio and adapt their assets to the changing market. What are the main advantages of this tool? Well, first of all, it lets combine different risk limits (volatilities) with different terms of expected returns. The result is that the investor can choose amongst different possibilities depending his or her interests or circumstances.

Secondly, it is helpful to discover correlated and non-correlated assets. With this information, the investor can reduce the risks and maximize the returns. Moreover, the tool lets the investor decide about which positions should be enlarged and which should be reduced to obtain the targeted performance.

To sum up, T-Advisor Optimizer is an easy visual tool that reports the investor about the changes to be done in the portfolio to get the best results. The main advantage is that the tool has different settings available so that the investor can choose which one fix to their particular requirements: the freedom in one click.

The February best performers in the main markets

February has been considered a traditionally unstable month for the markets. This year winds blow for a positive trend and the main markets performed over 5%. American Nasdaq closed February with 3.696 points, a 7,43% more than in the beginning of the month. In Europe, German DAX was near 9.700 points, exactly 9.692, a 5,5% more, while London FTSE beat the 6.800 points bar, till 6.809, a 5,32% more.

T-Advisor compiled the best performers in February in this reference indexes. In Nasdaq, the three more successful were Alexion Pharma, Mylan Laboratories and Facebook. All of them multiplied at least three times the index performance.

Perf. Month

Perf. YTD Score Volatility

VaR week

Alexion Pharma

32.92%

33.05% 10 37.7%

-7.18%

Mylan Laboratories

24.32%

28.04% 10 25.57%

-3.42%

Facebook

24.16%

25.25% 8.29 43.9%

-6.08%

In London, the three best companies in February were Kazakhmys, Fresnillo and Weir Group. All of them beat at least four times the index performance.

Perf. Month

Perf. YTD Score Volatility

VaR week

Kazakhmys

70.71%

38.71% 8.2 57.76%

-13.52%

Fresnillo

26.7%

27.63% 8.2 50.91%

-13.77%

Weir Group

21.72%

20.4% 9.8 27.28%

-6.33%

In Frankfurt, the best performers were Infineon Technologies, Continental and Lanxess. In this case, this companies only doubled the index performance.

Perf. Month

Perf. YTD Score Volatility

VaR week

Infineon Tech

11.37%

5.93% 8.93 26.93%

-6.14%

Continental

10.7%

10.63% 9.48 23.76%

-5.25%

Lanxess

9.53%

10.94% 7.93 32.48%

-9.08%

Chemicals (Alexion, Mylan, Lanxess), commodity producers and linked industries (Kazakhmus, Fresnillo, Weir Group), technology companies (Facebook, Infineon) and the automotive manufacturer Continental dominated as the best performers in February.

Portfolio score : your investing mark

Portfolio score by T-Advisor

When we were students, we received marks from the teachers in the exams. Sometimes it went fine, others not so good. In any case, the mark was an easy reference to know if we had passed or not. Why not using it in personal finances? That is the portfolio score in T-Advisor.

T-Advisor, as software mainly thought to control and organize individuals’ investments, was designed to be easy to understand for everyone, either the person had deep financial knowledge or not. We conceive the portfolio score as a personal reference that reports about the quality of our investments related to some measures. The marks are between 0 (the worst) and 10 (the best).

Portfolio score improvement suggestions in T-Advisor

How do you receive your mark? T-Advisor accounts:

  • Diversification: the more diversified portfolio with more positions, the better, as you reduced your risks.
  • Trend: a good score has a bullish trend, against a sideways or, even worst, a bearish.
  • Risk: T-Advisor compares your risk profile against the general portfolio risk. The system defines a risk range for every profile. Think about you are conservative and your portfolio risk is high: something goes wrong and you receive a low score.
  • Performance: as before in risks, T-Advisor establishes a range for the investment profile expected return. If the portfolio return is in it, it marks. If the return is nearest to the highest point in the range, your mark will be also higher.

T-Advisor suggests the investor possible improvements in every measure. For instance, as we see in the picture above, it recommends a review of the bearish positions. How can the T-Advisor user find new investment ideas? Searching in our “Market opportunities” tool or looking at in every position report (our T-Report) some alternatives that the own system suggests.

Create your own portfolio and discover these tool functions!