Investment Management on Multiple Levels
If you have any experience with investing, you already know that it's not enough to just buy into the market and hope for the best. You need to make sure your investments can offer you the returns you need at the level of risk you're willing to take. If your portfolio includes many different investments, such as hedge funds, mutual funds, stock, and commodities investments, you'll also want to combine their advantages and disadvantages to potentially lower the volatility you're exposed to. You'll have to coordinate all of your investments to allow for a high degree of diversification. In other words: You or someone you trust will need to keep an eye on your investments and make changes to them if necessary.
Any actor on the market who engages in investment also engages in some form of investment management. You might manage your own investment portfolio with tools such as the CARL app, which allows you to invest in our quantitative hedge fund strategies, depositing and withdrawing money at your leisure, without any lock-up periods. However, the hedge funds you invest in also employ investment management strategies themselves, as they invest in a variety of fields, from financial derivatives to stocks and bonds.
The Hands-off Approach: Hiring a Professional
If you don't want to bother with asset allocation, portfolio diversification, and all the other strategies that should be employed to make sure your portfolio offers the best returns at the lowest possible risk, you may be able to hire a professional portfolio management firm to do the job for you. This is a good way of making sure your money is taken care of, but it does come with one major disadvantage: You'll need to set some of your capital aside to pay the portfolio manager's fees. And for a good manager, those may be hefty.
The Hands-on Approach: Doing It by Yourself
The alternative is to be your own portfolio manager. It's cheaper, but it does require you to reserve some time every now and again to do investment management work. Since you'll be doing all of the work yourself, you also need to learn how to value the assets you're investing in and how to determine the risk that comes with investing.
Luckily, the CARL app gives you a plethora of useful information about our quantitative hedge funds, which makes this information-gathering work almost trivial. You can determine the risk you're taking on by having a look at our annualized volatility charts for each of our hedge funds, or you could look at our historical analyses to inform your investing decision. You'll also have all of the tools you need to invest or withdraw money, including a real-time portfolio overview – all on your smartphone. It's never been easier to be your own portfolio manager.
How Does Portfolio Management Work?
If you're planning to hire a professional portfolio management expert to help you craft your portfolio, that person will most likely hold an interview with you to determine your exact needs. Likewise, if you're planning to act as your own investment manager, you should ask yourself the following questions about your financial goals:
- What is your time horizon?
- What is your risk tolerance?
- How much money do you expect to make with your investments?
Strategic goals and developing an investment strategy
You (or the portfolio management professional) then craft a strategy to fit your preferences. For example, if you're looking for an investment portfolio that can make you a lot of money very quickly and you're fine with high risk levels, you could decide to invest in risky, unregulated investment funds or highly volatile assets. If you prioritize low risk and you have a lot of time to spare, you might focus on government bonds, which unfortunately, don't net great returns. If you're looking for a good combination of returns and reliable risk controls, CARL's hedge funds may be the investment vehicle for you, as they employ hedging strategies and quantitative data research to minimize risk while also going for 15%+ targeted returns.
The investment manager will then look for individual assets and asset classes that fit your goals. This step involves valuing assets, determining their level of risk, and many other complicated information-gathering tasks. If you're acting as your own investment manager, the CARL app can give you plenty of information to help you determine which of our quants fits your investment strategy best.
The process of investing in assets / asset classes and adjusting the percentage to which your money is invested in individual vehicles, to be in line with your investment strategy is called "asset allocation".
Now, you've got your goals, you've got an investment strategy to reach those goals, and you've got investment opportunities that may help you reach those goals. The next step is to actually invest in the assets. With CARL's quants, the easiest way to do this is via the CARL app – just a few taps on the screen, and you can invest and withdraw capital as you see fit, 24 hours a day.
Actively managing your portfolio
Lastly, it's not enough to just invest your money and be done with it. You (or your portfolio management professional) will also need to keep an eye on your assets to make sure they're still operating within the parameters of your investment strategy.
For example, if your goal is to get great returns at a manageable risk, you might invest in a hedge fund that uses hedging strategies via the traditional long/short model. But if that hedge fund starts investing in riskier positions while limiting the amount of hedging they do, the overall volatility of the fund may go up – and with it, the risk your entire portfolio is exposed to. In such circumstances, a smart investment manager will consider adjusting your portfolio's asset allocation by either withdrawing from the hedge fund and finding another investment opportunity or by staying and finding alternative, less risky vehicles to use for diversification, providing reliable risk management for your overall portfolio.
What Is a Passive Portfolio Strategy?
Portfolio management professionals distinguish between active and passive strategies. Active investment strategies aim to beat a certain market index by frequently buying and selling to create greater returns. A passive portfolio strategy aims to set up a portfolio so that it mimics the index, which requires less active buying and selling and won't outperform the index. Passive portfolios require less actual investing activity, which also means portfolio management professionals typically offer these services at lower fees.
Portfolio Management Is Essential for Investors
As an investor, you won’t likely put all of your money in only one or two asset classes or even just one or two investment opportunities. Diversification is important to investing success, after all. This means you need goals, a plan to reach these strategic goals, and the time and knowledge to implement your plan. And unless you want to spend part of your money on fees for a professional investment manager to help you, you should consider making CARL a part of your portfolio.
CARL offers sophisticated quantitative hedge funds with 15%+ targeted returns and a minimum investment of only $20,000. Not only do these quants offer incredible potential with built-in risk controls – you can use the CARL app to take full control over your investment funds and find out all of the important parameters that determine which of our quants fits with your strategic objectives. CARL provides you with unprecedented access to the power of quants while empowering you to become your own investment manager.