How does Axos Invest design my investment portfolio(s)?

We begin our investment process by identifying global asset classes with which to build our portfolio. We consider each asset class' potential return and sensitivity to different economic scenarios such as interest rate movements, stagnating growth, dollar strength, and inflation. Finally, we calculate the risk of each asset class. In addition to the standard measure of risk and volatility, we also look at "worst case scenarios" such as maximum drawdowns. Most importantly, we calculate the correlation of each asset class to one another. If two asset classes are highly correlated and perform in a directionally similar manner, it can be best to hold only one asset class as the potential return is already captured.

When you first open a Managed Portfolios account, we'll ask you a few questions to properly construct your investor profile. When you create your first milestone, we'll use this information along with your financial targets and time horizon to build your recommended portfolio allocation. This recommended portfolio optimally weights each ETF to provide your desired amount of risk and potential return along the efficient frontier. You can adjust your stock/bond allocation for each milestone at any time, and your recommended auto-deposit will automatically update according to the new risk-return preference.

Certain investment management account strategies may contain exchange traded funds (ETFs). ETFs are comprised of securities in a given asset class, which may share a similar behavior to those securities and could be subject to a significant level of volatility and risk.

Please keep in mind, neither the diversification of any ETF nor the strategy of using multiple ETFs in a portfolio guarantees an investment profit or ensures your investment from market risks or losses. Prior to the purchase of any ETF strategy, you should read the prospectus of each individual ETF carefully and consider the investment objectives, risks, charges, and expenses before you invest or send money. You can receive a prospectus for each ETF in a within the client portal or by e-mailing Axos Invest, Inc., at support@axosinvest.com.

An ETF is expected to approximate the performance of the index it tracks, but it may slightly underperform the index due to administrative costs. Less heavily traded ETFs may actually have market values that are significantly higher or lower than the underlying values due to the principle of supply and demand. For example, if a particular sector has fallen out of favor, demand for shares of an ETF in that sector may fall out of favor as well. This could cause the ETF's price to fall further than the underlying value of the fund's actual shares. Like all securities, past performance of any ETF is no guarantee of future results.

 

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