Open Asset Allocator Project

An Open source project composed of:

• An open, layman-summarized base of knowledge to learn about the subject and methodology Asset Allocation, known Asset Allocation strategies and concepts tied to a framework around the concept of Antifragility
• An open source tool to apply the knowledge and manage and monitor a long term investment portfolio using asset allocation strategies as a first-class citizen.

Caution

This project is in pre-alpha stage and its tool not ready for production use. It can evolve to a cloud ready service in the future, but is currently a work in progress without minimum security for anything but local usage.

What is an asset allocation strategy, and how can I learn more?

An asset allocation strategy is a plan for how to distribute your investments across different asset classes, such as stocks, bonds, and cash. The goal of an asset allocation strategy is to balance risk and reward by diversifying your investments.

Yes, this is the AI generated, statistically predominant, by the book definition. Something similar can also be found in places like Investopedia and Wikipedia. It is bland and not very helpful.

Some definitions I believe are a lot more useful:

• A strategy to manage assets with focus in the long term, with clear fallbacks for short term volatility and deviations;
• A technique to store cognitive energy in a plan that allows for intuitive, "automatic" behavior when moving assets, helping detach it from emotional influences and deviations;
• A way to time the markets without price and period targets, taking advantage of its cyclic nature (where appliable) to buy "cheap" and sell "expensive";
• A process that is historically used to manage large ammounts of assets, enjoying large accumulation zones and permanent time in the market;
• A method that allows for higher focus on some very important risk assessment and convex payoff topics:
  • Maintaining diversification with uncorrelated assets (without forgetting correlation is fickle, as it breaks and is resstablished dynamically during cycles);
  • Exploring barbell (bimodal) strategies;
  • Taking care of hedging tail risks.

You can learn more about this and related topics in the project's Personal Knowledge Management (PKM) docs.

What is this open source tool?

An application that allows the continued, long-term portfolio management with the usage of asset allocation strategies in a "fractal" structure. The allocation needs to follow this bottom-up, repeatable structure, composed of assets on the lowest level. Those assets can be grouped by any criteria defined by the implemented model, and that will form the top levels of the hierarchical structure.

Caution

The examples shown in this document or any part of the project are for mere illustration purposes of the application features with real data. They are not, at any point in time, to be considered investment advice. Asset values are also fictional.

Learn more...

Installing and running (pre-alpha)

Important

The pre-alpha version requires higher technical knowledge about software to use. Pre-requisites: git, docker, docker-compose, npm (version in .nvmrc), make. Verify if there is a provisioning script for your OS in the provisioning folder. If not, I welcome PRs to add them.

1. Clone the repository: git clone https://github.com/benizzio/open-asset-allocator.git
2. build the application: make
3. start the services: make start
4. application will be available at in localhost

Configuration can be done in .env

Note

Current pre-alpha version requires data ingestion or manual data insertion on the PostgreSQL database. To access the stored portfolio go to http://localhost/portfolio/<portfolio id>

Roadmap(ish)

Backlog - Not planned yet

• none

Pre-alpha - Phase 1

Main stack proof of concept: Assess that the base technologies and tools selected can solve the problem consistently.

Asset allocation management: Allow the registration and tracking of portfolions and allocations plans. Facilitate assessing portfolio vs. plan situation through time, helping re-balancing decisions through divergence analysis.

• Portfolio management:
  • new portfolio - add form based data input (beginner-user-friendly - start with fixed base structure class-> asset)
  • edit portfolio - base fields (e.g. name) only
• Portfolio history
  • add form based data input (beginner-user-friendly)
    • show total market value for entire form
  • copy data from different obsevation timestamps
  • template data from plan
  • no content message
  • market prices from external source (e.g. Yahoo Finance)
  • improve chart navigation
  • Line chart with portfolio total market value over time - history progress chart and performance
• Allocation Plan
  • add form based data input (beginner-user-friendly)
  • copy data from other plans
  • no content message
• Allocation map:
  • DIVERGENCE: last portfolio history from a timeframe, select an allocation plan to analyze
    • cash reserve marker on table (label & color)
    • persistence of generated analysis on timeframe for convenience BLOCKER FOR CONVERGENCE
    • show divergent value in currency units
    • show divergent value in percentage
    • show divergence mode used with informative text
    • add percentage divergence mode config ("aggressive" from level or "conservative" from asset)
• UI improvements:
  • Color configuration per hierarchy level record for visual consistency (apply to charts and tables)
  • Change accordion header font to differentiate from content

Alpha - Phase 2

Portfolio management: Enhance re-balancing assessments through convergence analysis and planning.

• Allocation map:
  • CONVERGENCE:
    • create from a mapped divergence analysis (bound to a divergence analysis and its plan)
    • fractal execution: create per level and per parent selection when below top
    • line for each divergent record, add a field for post-convergence goal (maket value) and calculate new percentage
    • allow obtaining inserted external cash inflow (“input” class) and using it for convergence in any asset
      • (?) upper field inside each level of fractal structure to visualize re-balancing and availability deeper within the hierachy.
    • (?) show final state after convergence (chart maybe?)
    • allow creation of multiple steps for segmented convergence plan
      • (?) Copy previous unexecuted plans on new divergence analysis
    • (?) field to input current market value at the time of convergence execution and calculate movement quantity (no need to persist)

Beta - Phase 3

• Portfolio management:
  • add structure management (add/remove hierarchy levels)
• Portfolio history
  • allow inclusion of external cash inflow via UI (as separate "input" class)
  • ui to handle data ingestion from known sources
• Allocation map:
  • DIVERGENCE:
  • add divergence bar mode config (change proportion from 2:1)
• Data ingestion improvements:
  • equivalent tickers field for assets
  • UI to call ingestion
  • Ghostfolio ingestion:
    • direct integration from API (holdings call)

Asset allocation intelligence: Expand management capabilities allowing users to understand how an asset allocation strategy can be created and modified for personal needs and expectations. Integrate indicators and data sources to access the ciclic nature of the markets and which phases of a cycle are currently experienced.

Financial education and research: Provide links to source material and educational content integrated to the features and where they are used