SimCorp launches Axioma fund allocation risk models for wealth and Fund of Funds managers

New York, London, Copenhagen, 21 November 2024 – SimCorp, a leading financial technology company, today announced the launch of two Axioma global multi-asset class fund allocation models.

The Axioma Fund Allocation Model captures fund investment risk through exposures to a curated set of fund and market category factors and fund specific risks. Meanwhile, the Axioma Worldwide Fund Allocation Model evaluates fund investment risk through a combination of exposures to the Axioma Worldwide Equity Factor Risk Model for equity ETFs and single name stocks along with a curated set of fund and market category factors.

Both models are specifically designed to meet the key use cases of wealth, overlay strategies, Unified Managed Accounts and Fund of Funds managers, providing a single and relevant view of equity, fixed income and commodity factors. This approach eliminates the need for multiple models, which may miss important cross-correlations among the asset classes.

“The new Axioma fund allocation risk models offer wide asset class coverage while being designed to use the fewest factors necessary to capture the most important drivers of risk and return,” said Ian Lumb, Head of Analytics Product at SimCorp.

Wealth managers are analyzing hundreds or even thousands of portfolios, which include mutual funds, ETFs, and individual equity securities, each with its own unique risk profile. A risk model condenses these assets into a smaller set of risk factors, allowing managers to see the bigger picture.

“Historically, wealth and Fund of Fund managers have relied on separate off-the-shelf asset risk models that often contained superfluous factors. The new Axioma fund allocation models are designed to be highly parsimonious, enabling these managers to explain the sources of risk while simplifying the construction of investment portfolios tailored to their specific needs,” Lumb said.

One of the growing needs within wealth management is the ability to create or transition portfolios that prioritize after-tax returns and the increased demand for portfolio customization. The risk models use machine learning to capture the specific returns of funds with similar return dynamics. This feature allows wealth managers to easily identify replacement securities and manage the risks associated with funds tracking the same benchmark. Consequently, the models support the construction of tax-aware portfolios that maximize after-tax returns across various risk levels.

Axioma Fund Allocation Models can also be deployed in other ways, including:

• Tax-efficient asset transitions and proposal creation
• Unified Managed Accounts
• Overlay portfolio management
• Model portfolio construction and rebalancing
• Asset allocation
• Portfolio optimization
• Risk attribution
• Fund manager differentiation

This model release builds on SimCorp’s existing offerings for wealth managers, including Axioma WealthVision, which helps wealth managers who manage multiple client accounts monitor and prioritize the scheduling of the rebalancing of their portfolios. By combining the Axioma Portfolio Optimizer and machine learning, this solution removes complexity from the portfolio rebalancing process.


About SimCorp

SimCorp is a provider of industry-leading integrated investment management solutions for the global buy side.

Founded in 1971, with more than 3,000 employees across five continents, SimCorp is a truly global technology leader that empowers more than half of the world’s top 100 financial companies through its integrated platform, services, and partner ecosystem.

SimCorp is a subsidiary of Deutsche Börse Group. As of 2024, SimCorp includes Axioma, the leading provider of risk and management and portfolio optimization solutions for the global buy side.


Media Contact

Søren Rathlou Top
Global PR Manager at SimCorp
+45 31 15 87 06
[email protected]