A Holistic Approach: Diversification & Smart Allocation

Part Three of a Three-Part Series.

6. Bridging the Gap: A Holistic Approach

Combining Diversification and Weighting Strategies

Once investors go beyond individual stock-picking and start to take a strategic approach to portfolio construction, it is clear that there is a lot for them to consider. In fact, stock-picking starts to look like the easy part — or, at least, the simple one.

They need to create a personalized investment approach that factors in their individual financial goals, and their risk tolerance. They need to select a diverse range of assets that reflects these, and consider how to weigh these various investments.

For the average retail investor, this is a big ask. While there has been a significant increase in the range of apps and platforms through which retail investors can buy or sell stocks over recent years, these do not offer any realistic means for these investors to implement a proper portfolio management strategy that does not involve long, arduous stints in Excel spreadsheets¹.

There is an increasing need, in other words, for tools that simplify portfolio management for retail investors.

7. Introducing OPTO Folios

OPTO Folios is an innovative tool that seeks to address this problem. This new product supports investors to design a custom collection of stocks, which OPTO then rebalances every quarter according to the user’s chosen weighting strategy. In other words, users continue stock picking, while OPTO takes care of the hard part.

Stocks within the OPTO universe are categorized into themes, enabling investors to quickly identify stocks that offer exposure to different long-term global megatrends.

Key Features

• Personalized Portfolios: Select stocks that reflect your individual strategy and interest, from over 30 different high growth themes;

• Automated Weighting Strategies: Apply market cap or equal weighting to portfolios, saving you the time and energy needed to manually calculate weightings.

• Ongoing Management: Automated quarterly rebalancing ensures the portfolio remains aligned with the chosen strategy.

Benefits for Investors

These automated features simplify the complexity of portfolio management, giving retail investors the confidence to know that their strategy will be implemented every quarter.

By letting OPTO Folios perform the complex task of rebalancing portfolios through strategic automation, investors can balance risk and reward without having to become emotionally involved in the decision-making process.

All the while, the portfolio remains distinctively yours: the stocks you know best, in a portfolio that is entirely tailored to you.

8. Conclusion

Empowering Investors

There are ample opportunities for rewards available to retail investors. However, the tools required to manage the accompanying risk are, in general, not available to them.

Without a strategic portfolio management strategy, volatility and risk threaten to undermine investors’ efforts to reach their long-term financial goals.

A lack of diversification increases the unsystematic risk inherent in individual stock picking. Without a clear weighting and rebalancing strategy, investors rely on gut feel to know when to buy or sell any given holding.

However, tools like OPTO Folios have the potential to bridge the gap between risk and reward. Investors can optimize their portfolios with dynamic, automated portfolio management features, enabling them to approach investing with something more closely resembling the strategy of a professional investor.

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This is for informational purposes only. OPTO Markets LLC does not recommend any specific securities or investment strategies. Investing involves risk and investments may lose value, including the loss of principal. Past performance does not guarantee future results.

1. https://www.vanguardngr.com/2022/07/investment-portfolio-management-by-retail-investors/