Investment Optimizer (IO) is a risk/reward efficient frontier optimization application for strategic asset allocation, which optimizes investment strategies, simulates trading strategies and aggregates risk metrics and portfolios across multiple entities. Unique in the industry, IO takes investment risk modeling and analysis to the next level. IO allows you to see how your portfolio strategy can be adjusted to increase investment performance and/or reduce portfolio risk within the bounds of a clearly defined risk appetite, providing critical insights on investment risk and reward.
Designed specifically for strategic asset allocation for insurers' constrained environment, the optimization analysis considers the accounting and capital constraints of investing in alternative asset classes, as well as the boundaries of your investment guidelines. Allocating capital to investment risk and establishing risk-adjusted benchmarks has never been easier.
Investment Optimizer works seamlessly within our GEMS® Economic Scenario Generator, FIRM® Portfolio Analyzer, and ADVISE® Enterprise Risk Modeler. You can perform asset-based efficient frontier analyses, but the IO application is particularly powerful when analyzing investment risk on an integrated basis with underwriting, liability and operational risks.
Investment Optimizer can be used to:
- Maximize investment income/return on a risk-adjusted basis, allowing you to optimize return on required capital
- Set investment benchmarks that fully reflect liability and regulatory considerations
- Analyze stress scenarios to better understand potential downside risk and avoid unintended consequences
- Set risk capital budgets for your investment activities
Investment risk and reward are intimately linked. While higher reward might suggest higher risk, an optimized risk/reward analysis frequently identifies higher-yielding asset allocations with the same or lower levels of risk. Investment risk/reward analyses enable more informed investment decision making, and allows you to map the position of your current portfolio's risk/reward profile against a risk/reward efficient frontier that identifies the optimal portfolios for each level of risk.
With Conning's Investment Optimizer, you can produce constrained efficient frontiers of asset allocations based on risk/reward metrics, taking into consideration any combination of assets and liabilities. The Investment Optimization capability captures the approach that has guided Conning's strategic asset allocation.
To learn more about Investment Optimization and other risk and capital management services from Conning, please contact us.