The solution component ifs.sbo™ is an active approach determining an optimal portfolio within the context of investment decisions.

In contrast to the classical optimization method by Markowitz, which uses the expected yield of the involved assets as an input parameter, if.sbo uses a yield forecast independent method of robust portfolio optimization and includes arbitrarily many market scenarios into its computations.

The ifs.sbo user forecasting the future market development is not restricted to a single scenario, but may consider simultaneously many different developments for the process of strategic asset allocation.

The artificial intelligence methods used by ifs.sbo moreover assure an adequate presentation of the strategic requirements which cannot be defined sharply, partly because of their uncertainty and for model specific reasons. Thus all the information can be taken into account without any restrictions.

The portfolio determined this way assures an optimized minimal yield observing all asset allocation restrictions independent of the actual scenario. ifs.sbo is available as a modular extension for any trading and portfolio management systems.

Overview of the main benefits:

1. Different market scenarios can be considered simultaneously.

2. Arbitrarily many constraints can be observed simultaneously.

3. All conditions also have qualitative descriptions.

4. The portfolios can easily be combined with respect to instruments and structure.

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ifs.grid™ is a technical platform supporting distributed and parallel processing. The following practical examples can be solved efficiently:

1. Grid Pricing Framework: Libor Markt Modell (BGM,HJM)
2. Risk Management: Real time Pre deal check at a simulation-oriented risk calculation approach
3. Portfolio Performance Measurement: In theory the success of financial investment can be determined by the computation of the value performance between to points in time. The requirement of an exact computation e. g. of a single deposit of securities or in particular of the performance of a whole section or department (measuring the consulting quality) is highly complex and takes considerable computational resources.

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ifs.iss™ (investing strategy simulator) is an approach for evaluation of investment strategies.

There are two basically different approaches in portfolio management. In the so called active approach the portfolio manager tries to buy those securities which will outperform others. Many studies show that the majority of active managers fail to beat their benchmarks. On the other hand the number of passive fund managers who simply mimic an index has increased considerably during the last years. They give up the chance to outperform the market being satisfied not to underperform the market.

Are stock markets really so efficient that there should be no strategy with the prospect of an above-average success selecting the right shares?

The big problem for the active management is the fact that their strategies are not pursued systematically and consequently. The results of the so called Behavioral Finance show that rationality and ability of consistent behavior of individuals are limited. An interesting and possibly fascinating story has a higher impact on our opinions than hard but boring facts: complicated analysis is preferred to simple less spectacular results.

Therefore it is more promising to search for a strategy being simple, economically reasonable, and successful over longer periods. Success or failure in the past is the only source we can learn from. Only the use of computers and databases opens or supports new systematic and promising opportunities.

Developing and testing strategies remains a challenging task with many pitfalls, anyway. The usual spread sheet applications do not fully meet this demand. The module ifs.iss solves this problem and opens the way to successful asset allocation strategies.

Moreover the user takes advantage of the new AI-methods detecting previously unknown dependencies in the market development utilizing these for a successful portfolio management.