OAM launches Factor Allocator tool
Optimal Asset Management (OAM), an asset manager offering institutional class factor strategies to RIAs through ETF-based implementations, has launched a Factor Allocator visualisation tool.
The tools aims to help institutional investors and investment advisers identify, visualise and implement investment factors that drive portfolio returns.
"As smart beta, factor based investing and style tilted strategies become more mainstream, there is an urgent need for easy-to-use tools to help investment professionals educate themselves about how to implement factors in their core portfolios," says Vijay Vaidyanathan, chief executive officer of OAM. "We built Factor Allocator to help investment professionals play around and get comfortable with the exciting new generation of factor-based building blocks. Factor portfolios that seek to outperform and reduce risk at low cost can play a transformative role in client portfolios."
Factor Allocator is a free, web-based educational and visualisation tool that features more than 20 years of historical factor-based index data from S&P Dow Jones Indices, the world's largest resource for index-based innovation, data and research.
The tool includes a "Factor Playground" feature which provides visual feedback on the impact of various factor choices.
Additionally, a "Factor Fit" tool helps financial professionals by estimating the underlying mix of factors that drive the returns of a mutual fund, ETF or active manager. The Factor Fit tool can be used to evaluate whether it might be appropriate to substitute an investor's mutual fund or active manager holdings with a combination of low-cost ETFs that target similar returns drivers as the mutual fund or other core holding, with the added benefits of scientific diversification and low fees.
"S&P Dow Jones Indices has seen an increased popularity of its factor indices," says Vinit Srivastava, managing director at S&P Dow Jones Indices. "We are happy to be working with Optimal Asset Management to help educate market participants about the different characteristics of these strategies."