After completing his PhD in mathematics, Tommaso Mingazzini began his career with Deloitte in Milan. He now works in the management company GFG (Groupe Financier de Gestion), Monaco SAM as Risk Manager. At the latest event staged by the Monegasque Association of Financial Activities (AMAF), he had the opportunity to present the AAA (Active Asset Allocation) allocation model. Designed by GFGLAB, the quantitative department of GFG, the model makes it possible to invest systematically in the financial markets with the goal of maximising the risk-return ratio.
Can you explain the Active Asset Allocation model?
The Active Asset Allocation model was developed by GFG in 2015. We created this model in order to manage private clients’ portfolios optimally, while evaluating the performance of our in-house managers. Investment decisions are now taken systematically using a given process, which saves time.
GFG officially launched this investment model on its private clients’ portfolios in early 2016. It is our duty to constantly improve our model, which is why GFG decided to launch the UCITS V version of this AAA model in January 2018.
What is the difference between the model you have created and a robot-advisor, responsible for managing financial values?
This logic of automated construction of robot-advisors may be similar to ours. However, our systematic investment model goes further by using qualitative as well as quantitative data. This qualitative information is developed using an in-house-designed questionnaire which is then sent to GFG’S internal managers and to external funds managers in order to obtain their views on the performance expected by the financial markets.
This systematic approach coupled with qualitative data is the strength of the AAA model, through optimal risk diversification. It is here that it is differentiated from a simple, purely quantitative model which can be found in a robot-advisor.
Don’t the managers have difficulty in working with this new model?
Investor confidence must be generated through results, which demonstrate the model’s effectiveness and need to be clear, not misleading, and easily accessible.
Our model runs in open architecture through a completely independent, autonomous selection of external funds, aimed at selecting the best funds in each of our investment categories. This completely transparent funds selection process allows us to strengthen the confidence of portfolio managers and their clients.
Is the model modifiable?
Our investment model can indeed be adjusted according to the client’s risk appetite and needs. With our model, we can change the exposure to each asset class and the underlying funds, within the restricted scope of our survey.
