Like most advisors, I have a need for a system that provides meaningful security and portfolio analysis to help facilitate good investment decisions. One of the first items on the ‘must have’ list is an account’s broad allocation. To be more specific, I need a tool that calculates the broad allocation of all accounts in a single view.

Knowing an account’s percentage in stocks, bonds, cash, alternatives, etc., is important because when fear rises and stocks begin to tumble, accounts with greater exposure to equities contain more risk and will likely lose more than accounts with less exposure.

When I couldn’t find a solution I was comfortable with, I decided to create my own. After adding some VBA code to an Excel spreadsheet(as mentioned in last week’s posting), I can simply push a button and view each account’s updated allocation in one report. But that’s really not my topic this week. 

An advisor who read last week’s blog sent me an email asking if I had heard of Portfolio Lab from Kwanti. I had not. He wasn’t sure if Kwanti provided the report I needed, but he thought it was worth a look. So I called the company, left a message, found its website and began watching a 10-minute video on its product. Before I was finished with the video I received a call from Kwanti’s founder. After a conversation (and many questions) I signed up for a free 30-day trial. Here’s what I learned.

Kwanti is an excellent portfolio analytical tool which includes mutual funds, ETFs, stocks, and indexes. Users can easily view a portfolio’s broad allocation by asset class, subcategory or sector. It also provides the expenses for each holding in the portfolio.

It also includes a correlation matrix with a unique twist. When you select a view showing the correlation between two securities, Kwanti generates a line graph which shows how the correlation has changed over time. You can view this using daily or monthly returns.

Kwanti also calculates each investments contribution to total portfolio risk and it has a forward-looking portfolio optimizer.

One of the best features is its ability to back-test portfolios. You can choose from a number of trailing periods or select a custom beginning and ending date. With the latter, you can see how a portfolio would have performed during a recent crisis. Portfolio Lab will show the effect that an asset management fee has on a portfolio’s return (with or without rebalancing) and dividends and interest can be reinvested or paid to cash.

Most surprising is its price: only $495 per year. Kwanti is easy to learn, competitively priced, and very robust. Although Kwanti doesn’t have the specific report I was seeking, it definitely warrants consideration.

Until next time, thanks for reading and have a great week!