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  • Writer's pictureJacques Cailloux

How to maximize returns with Portfolio Copilot

Updated: Apr 1

Emily, a retail investor, has a portfolio on eToro, a popular trading platform. She wants to optimize her investments based on current market trends and economic indicators but has struggled to find the place and time to have a solution readily available at her fingertips.

 

InvestAlert Portfolio Copilot is the solution she has been looking for and requires only 2 steps:

 


  • Connect your portfolio for diagnostics and insights to start feeding through.

 

Emily has now connected her portfolio. She uses Portfolio Copilot as a comprehensive assistant for making better informed investment decisions, leveraging the portfolio optimizer available at hand. The tool helps her understand the broader economic currents that influence market movements, ensuring she's not "sailing blindly" but rather making strategic choices to navigate through market volatility and towards her financial objectives.

 

Portfolio Copilot replicates Emily’s portfolio but adjusts its position in light of incoming fundamental information that may have a long lasting impact on the portfolio’s performance. By watching Portfolio Copilot, Emily is able at all times to see if her portfolio holdings should be rejigged to ensure maximum returns over the medium term.  

 

InvestAlert Portfolio Copilot sits next to Emily’s portfolio and shows at any point in time if any of Emily’s holdings should be increased or reduced to maximize returns. A comparison of the two portfolios’ performances is available at all times to see what performance gains the Portfolio Copilot is able to deliver should one replicate its holdings.

 

It is up to Emily to decide whether to adopt the Copilot's strategy: she remains the pilot, she remains in charge. The copilot has no access to Emily's trading, only to a snapshot of her positions as it needs to be able to mirror her Portfolio to simulate an optimised one.


In other words, no money is ever transferred, or trades ever executed. Only Emily can change her portfolio positions, should she decide to.

 

Portfolio Copilot is best at capturing shifts in fundamentals that may have a significant and long lasting impact on individual portfolios. It works through the mapping of portfolio holdings with their fundamental drivers and monitoring them 24/7. Currently, equities, bonds and crypto are covered.

 

Below are examples of how Portfolio Copilot has performed over time for equities and crypto:


  • Equities: S&P


The performance gains achieved by Copilot relative to the S&P over the medium term is substantial. When looking at the annual performance tables, one can see that this performance comes from a dramatic reduction in the size of drawdowns.


Copilot reduces its exposure to the S&P when the outlook turns adverse and allocates the proceeds into cash, waiting for the outlook to turn positive again, the trigger needed to regain its full exposure to the S&P. By reducing losses over time relative to a buy and hold strategy, Portfolio Copilot is able to generate almost twice the returns of the S&P over the period.


S&P and Copilot - Investing USD100 at the end of 2006



Below are the annual returns comparisons between the buy and hold S&P strategy and that of Portfolio Copilot.


 

% return of the S&P and % return of Portfolio Copilot on the S&P

Annual returns compared between buy and hold strategy and InvestAlert Copilot

Note: These performance numbers are out of sample for all the years reported. In this example, Portfolio Copilot reduces its exposure to S&P when the outlook turns adverse and allocates the proceeds into cash.


  • Crypto: Bitcoin


% return of Bitcoin and % return of Portfolio Copilot on Bitcoin

Note: These performance numbers are out of sample for all the years reported. In this example, Portfolio Copilot reduces its exposure to Bitcoin when the outlook turns adverse and allocates the proceeds into cash.


The key takeaway is that Copilot is particularly good at reducing drawdowns (ie the sharp and protracted losses): between 2007 and 2022, the average annual drawdown of the S&P has been around 15% while that of copilot has been half that. For Bitcoin, the average annual drawdown over the 2019-2022 period was 55% while it was 24% for Copilot.


Circling back to Emily and her portfolio, Copilot provides the following key features:


  • Warnings ahead of time of impending and protracted portfolio losses


  • Real time alerts notifying of changes in the outlook for the asset classes held in the portfolio


  • Hyper-personalization of portfolio performance including up-to-date explainers of key portfolio movers and shakers.


If you would like to see copilot performance against the most popular retail portfolio portfolio or connect your portfolio, just sign up here.





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