The Next-Gen Robo4Advisors
No man is more powerful than a machine, but no machine is more powerful than a man with a machine.
Paul Tudor Jones
What is R4A?
Lumen creates R4A, an innovative digital solution, to construct highly customized portfolios that identify, rank, and capitalize on investment opportunities across any markets, asset classes, strategies, and styles globally. Its unique “open source“ feature is powered by a proprietary algorithm, the Lumen Global Value Compass, which extracts unbiased, universal, and forward-looking expected returns directly from the market. This algorithm forms the foundation of the platform and allows for an unlimited ranking of global investment opportunities, not biased by subjective forecasts, and comparing and ranking alternatives on the same fundamental and apple-to-apple base, i.e., a true GPS of global value.
Learn about the Lumen Global Value Compass.
Using this single value metric, R4A is uniquely capable of generating an exhaustive ranking not only across traditional asset classes such as bonds, equities, commodities, and real estate, but also across sectors, industries, and other investment vehicles such as prominently ETFs, alternatives funds, etc. Furthermore, R4A can generate an objective ranking and value assessment across investment strategies, including income, capital preservation, accumulation, etc., and themes including ESG. Additionally, R4A provides an objective assessment and ranking of various factors, including growth, value, size, quality, momentum, and low volatility. This unbiased and universal ranking makes it the quintessential starting point for a professional asset allocation workout across any investment mandate and strategy.
Building on this unbiased ranking, R4A then provides a module that allows users to integrate their own forecasts, if any, into the asset allocation process. Powered by a much-enhanced proprietary version of the Black-Litterman Model, the module combines the market’s implied expected returns with the user’s subjective views and forecasts resulting in a more robust and rational set of expected returns, a critical input for constructing optimal investment solutions that lead to well diversified and superior risk-return attributes (see chart below).
Read our research paper on Enhanced B&L.
R4A also features a unique risk profiling module that takes a holistic approach, merging a finance-driven psychological profile of the investor, with an assessment of current and future financial strength, and with a clear definition of investment objectives and goals. The module then matches the overall result with at least three suggested investment solutions that can then be tweaked, optimized, and further calibrated to closely match the risk preference and goals of the investor.
Overall, R4A’s proprietary algorithms and unique open architecture, combined with its advanced modules and optimization techniques, result in highly tailored and efficient investment portfolios that are based on forward-looking coherent expectations, aligned with the investor’s risk profile and goals, and well-diversified to manage risk and amplify opportunities of value-based returns.
Curious? Please visit our FAQ page to learn more details about the unique elements of R4A.
If you are an investor and are interested in being a beta user:
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