While all pension funds are different, they generally tend to have the same objective – to maximize long term returns, subject to certain risk constraints.

The goal of a pension fund is to maximize long term returns

Strategic asset allocation goal

We generally find that most pension funds follow a similar approach – they have a reference portfolio (benchmark), and then create a strategic asset allocation portfolio (e.g. with a 5+ year timeframe) that aims to outperform the reference portfolio. Additionally, pension funds aim to take advantage of shorter term opportunities through tactical asset allocation trades. 

It is a simple objective, but as we know, it’s challenging to achieve because it requires portfolio managers to have a good grasp of the return prospects for all major asset classes, over both the short and long term.

Achieving strong long-term risk adjusted returns is a difficult balancing act

Strategic asset allocation - balancing act

ClearMacro’s portfolio diagnostic tool is designed to help portfolio managers achieve this objective in an efficient and transparent way. We upload your strategic asset allocation portfolio to our cloud enabled platform and run the diagnostic.

Our software analytics will estimate your long-term portfolio returns, and identify the top risks and top opportunities available. We can make recommendations of portfolio tilts versus your benchmark or versus your strategic asset allocation portfolio over the short, medium, and long-term.

How Our Software Works

Our investing software, the ClearENGINE, transforms data into easy-to-understand investment signals that have predictive insight about future market returns. Our signals allow you to quickly analyse different asset classes and markets, in a systematic and structured way. 

There is a lot of talk these days about using data to improve investment returns, however data is a risky asset. Our software does the heavy lifting of sourcing, categorising, systematizing, and updating data, so you don’t have to.

It is quick, efficient, and unbiased. 

We source data and transform it into investment signals that are standardized and rated from 1 (bearish) to 10 (bullish).

Example of one of our investment signals

Our signals are back-tested to determine which signals are best at predicting future market returns for each major asset class (equities, bonds, credit, commodities, FX) and geography (DM, EM, and Frontier). 

Our signals can be looked at on a stand-alone basis, however we believe it’s better to look at several signals at the same time to give us a more balanced view. We therefore aggregate the best signals for each asset class into an overall investment rating. 

Below is an example of one of those investment ratings – the technical outlook for U.S. equities. The rating is made up of 15 technical signals that have proven to have predictive insight about U.S. equities. Each of the 15 signals are equal weighted to produce one overall rating, which currently is “Moderately Bullish”.

The technical rating for US equities is “Moderately Bullish”; the rating is made up of 15 investment signals, all equal weighted.

How Does Our Portfolio Diagnostic Tool Work?

Our portfolio diagnostic tool uses our investment signals and investment ratings to evaluate your strategic asset allocation. You input your portfolio holdings, and let our diagnostic tool analyze them.

Each holding is given a rating from “very inefficient” (three red squares) to “very efficient” (three green squares), over the short, medium and long-term. 

To explain it simply, you want your portfolio to exhibit as many green squares as possible, and as few red squares as possible.

Our portfolio diagnostic tool’s rating for a traditional 60/40 portfolio

You can immediately identify your top risks (by going to the “Top Risks” tab), and top opportunities (by going to the “Top Opportunities” tab), and use them to change your SAA portfolio, or to implement TAA trades to take advantage of shorter term opportunities. 

The diagnostic tool leverages high powered computing to analyze your portfolio, which makes your investment process more robust and efficient, and frees up time for you to focus on what really matters. 

Contact us to Get a Free Consultation

The ClearENGINE can help pension funds improve their strategic and tactical asset allocation decisions. Our software does the heavy lifting, so you don’t have to.
If you’d like to set up a no-commitment, free consultation to learn how you can use our software to improve your investment process, please fill in your details and we will get back to you.

P.S. below we have attached a video that shows how our portfolio diagnostics tool works in practice.