New Product Announcement: Dynamic Model Portfolios

We’re excited to announce Dynamic Model Portfolios as the latest addition to the YCharts platform.

This game-changing enhancement to YCharts Model Portfolios, one of our most powerful tools, enables improved analysis and provides even more ways to communicate your strengths as an investment advisor.

With new Dynamic Model Portfolios, you’re able to present and discuss the impact of your historical asset allocations and holdings adjustments with clients and prospects. This new capability helps advisors more accurately depict historical performance, and effectively show the impacts of decision making with clients.

While other portfolio analytics tools may be sufficient for explaining the merits of your current investment strategy, they are limited by assuming that holdings and strategy remain fixed over a portfolio’s lifetime. However, YCharts Dynamic Model Portfolios incorporate the adjustments you’ve made in the past to create talking points and highlight how your investment strategy has evolved over time.

To help you get started, here are setup instructions and a few impactful ways to leverage Dynamic Model Portfolios for improved client and prospect conversations. If you’re a YCharts Standard subscriber interested in using Dynamic Model Portfolios, please reach out to speak to a product specialist and upgrade your access.

How to Create A Dynamic Model Portfolio

Watch this short video for a walkthrough of creating Dynamic Model Portfolios in YCharts, hosted by Nick Maggiulli, Chief Operating Officer of Ritholtz Wealth Management and Author of the blog Of Dollars And Data. Or, follow the step-by-step instructions below.

To create a Dynamic Model Portfolio on YCharts, first prepare an Excel file containing your portfolio’s holdings, weights, and the dates each position was held. This information can likely be exported from the tool you use to manage portfolios. Additionally, we’ve created a template that you’ll be prompted to download when creating a Dynamic Model Portfolio. See below:

1. In YCharts Model Portfolios, click Create in the upper right corner, select Blank Dynamic Model Portfolio. (Existing static Model Portfolios cannot be converted to Dynamic Model Portfolios.)

2. Give your portfolio a Name and Description, then select your Advisory Fee (if applicable), Benchmark, Rebalance Frequency, and Initial Level.

3. Click Upload Data under “Get Started”, then click to browse files on your computer or drag and drop your holdings file (either .xlsx or .csv formats) into the designated area. Here, you can also click Download Our Template to access a blank Excel workbook that already meets formatting requirements.

4. A green check mark and the message Your file is in the correct format will appear when your portfolio holdings have been uploaded successfully. (If not in the correct format, YCharts will prompt you to amend the file and try again. Notably, the “Target Weight” column must be a decimal—up to 4 decimal places—or percentage, and sum to 1.00 or 100% for each date column period, respectively.)

5. Click Submit and review your historical holdings and positions in the table.

6. Click Save in the upper right corner. Your portfolio may take a few minutes to calculate.

Impactful Ways to Use Dynamic Model Portfolios

As with every new or enhanced feature on YCharts, we created Dynamic Model Portfolios with financial advisors, and their clients, in mind. Explore how this new feature enables you to create better portfolio strategies and communicate their strengths to your clients and prospects.

Present portfolios with holdings that have changed over time

Rarely do a portfolio’s holdings stay constant over its entire lifetime. Still, many other tools calculate past hypothetical returns for a portfolio assuming the holdings have never changed. With YCharts Dynamic Model Portfolios, positions and weights are shown as they existed in the past for a more accurate depiction of performance and risk over time.

When presenting to clients, use the Holdings tab of your Dynamic Model Portfolio to quickly illustrate historical changes in holdings, and the dates each change was made.

Click to Build a Dynamic Model Portfolio in YCharts

Discuss reallocating a portfolio to reduce a client’s risk exposure over time

As a client nears retirement, it’s common to move away from riskier holdings and toward those that are more stable, or provide income. This is often accomplished by reducing exposure in certain risky positions.

Using Dynamic Model Portfolios, you’re able to illustrate how a strategy has decreased risk over time. The example below shows a portfolio that has progressively lowered its Beta through strategic holdings changes.

Click to Build a Dynamic Model Portfolio in YCharts

Show the benefits of being active with a tactical or sector rotation model

Do you track market conditions and use your insights to over or under-weight certain asset classes, sectors or geographies? “Tactical” or “rotational” strategies aim to capture market momentum and achieve outperformance—with Dynamic Model Portfolios, you can highlight your strengths as an active manager.

For example, show the benefits of timely sector tilts by charting a Sector Rotation Model vs. the S&P 500 and ETFs for sectors that were over or under-weighted during the period. See below an example strategy that is overweight technology and underweight energy, created using Fundamental Charts.

Click to Build a Dynamic Model Portfolio in YCharts

Create proxies for holdings with limited performance history

Do any securities in your client portfolios have limited performance histories? If you’re using any ETFs or mutual funds that were created in the last few years, it may be difficult or impossible to accurately depict strategy performance before their inception dates.

When uploading a Dynamic Model Portfolio, you can include similar securities as proxies in any periods before a current holding was available.

For example, if your model portfolios hold the Vanguard S&P 500 ETF (VOO), which debuted in 2010, but you want to show the strategy’s resilience during the ‘08 Financial Crisis, use the SPDR® S&P 500 ETF Trust (SPY), which listed in 1993, as a holding for 2009 and any years prior.

The use of a proxy can help you visualize a portfolio’s long-term performance and examine it during key time periods, but be sure to make clients aware of the proxy you’ve used.

Share your feedback to make YCharts even better

YCharts has helped advisors and asset managers create, optimize, and communicate their investment strategies for more than a decade. With Dynamic Model Portfolios, YCharts users are even better equipped to visualize and explain how they create value for their clients.

YCharts Standard subscribers interested in using Dynamic Model Portfolios: please reach out to speak to a product specialist and upgrade your access.

Much like the advisors we serve, we at YCharts pride ourselves on listening to our clients and understanding their needs. If you’re a YCharts client and have questions or feedback regarding the Dynamic Model Portfolios or the platform’s other capabilities, please reach out to your designated support contact to share your thoughts.

Not a YCharts user yet? Sign up for a 7-Day Free Trial or contact us via email at hello@ycharts.com and by phone at (866) 965-7552 to learn more.