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Quick and Easy Portfolio Rebalancing

ASI continues to improve, does credible job of automatically rebalancing portfolios.

Joel P. Bruckenstein, 07/12/2007

Advisor Software, Inc. recently unveiled the latest version of ASI Portfolio Rebalancing Solution. The application performs three tasks: rebalance an existing account or a group of accounts to a model portfolio, rebalance an existing household to a model or target allocation, and create an investment proposal for a prospect. This latest release builds on the success of the original version by further automating time-intensive rebalancing processes, thereby boosting advisor efficiency. It also adds a number of important new features.

Never heard of ASI? That's not surprising; few advisors have. It's a good bet that you or an advisor you know has used one of ASI's products, however. If you've ever used the Allocation Proposal Tool on the financial professional's section of the Barclay's Global Investors iShares site, for example, you've used an ASI application. If you've every used the TD Ameritrade Institutional Rebalancing Tool, you've used an ASI product. The firm's applications are deployed by other institutions, too, including Fidelity Investments, PowerShares, ShareBuilder, and State Street Global Advisor, to name but a few.

ASI's management team is experienced and knowledgeable. Andrew Rudd, CEO and founder of ASI, is a former CEO of BARRA, Inc., a company he co-founded. Rudd is an expert in asset allocation, modern portfolio theory, risk management, and performance measurement. Neil Ringquist, president and COO, served as vice president of sales and marketing for Morningstar Associates, LLC, a registered investment advisor and wholly owned subsidiary of Morningstar, Inc. Before Morningstar, Ringquist was the executive vice president responsible for sales, marketing, and client service for mPower, a privately held San Francisco-based investment advisory firm that was acquired by Morningstar in July 2003.

Getting Going
Before you begin using the program, you need to set your preferences. I'm going to describe the setup process when using the "standard" application. Since this software is deployed on an institutional basis, your experience may vary based upon what institution is supplying the software. In addition, some preferences that I'm required to set in my version will most likely contain default settings supplied by the institution. In some cases, the advisor might have permission to change these settings...in others, the defaults may be locked down with no option to change them.

The first time I enter the program, my first stop is the main preference page. This page contains links to the four preference areas that must be addressed before the program can be used: target allocations, model portfolios, investment universe, and advanced settings.

First, I went to the target allocation area. Here is where the advisor sets up asset-allocation models that can then be applied to multiple clients. When I entered that target allocation area, I found that ASI had created four sample target allocations for me. It is highly likely that any institution offering the application to advisors would pre-populate their version with at least some optimized, ready to use target allocations suitable for various risk tolerances

I decided to create a new target allocation. ASI allows the user to create allocations based upon either capitalization/style targets or upon sectors. I chose the former. As you can see here, it is possible to quickly create target allocations using the broad asset classifications (equities, fixed income, cash, and, if desired "other").

The program also offers the flexibility to create more detailed allocation targets employing sub asset classes, if desired. Clicking the plus signs next to an asset class instructs the program to display the underlying sub menus. Here is a view with all the programmed allocation options displayed.

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