What is an investment allocation?
Why do I need to choose an investment allocation?
Does it matter what investment allocation I choose?
How do I choose my investment allocation?

Algo's vs Investment allocation

At Unhedged, proprietary algorithms make the trading decisions. They each have a different built-in strategy that is continuously being improved and adapted to market conditions by our Quants. However, you still decide how you want to spread your investments across the algorithms. In other words; you still decide how to allocate your investment with us.

Each algorithm has its own trading strategy and most importantly its own risk-return profile. Learn more about the algorithms here. Your investment goals, horizon and risk-appetite are unique to you. Unhedged is not licensed to give personal advise where we look at your personal situation and determine what is best. We are licensed to give general advice and in effect that means we can present factual information about the fund and the options and you make the decision. This way we can concentrate all our efforts on making Unhedged a smooth experience instead of building a big organisation with lots of people, and why we leave it to you to decide how to allocate your money.

Some help please...

We understand that selecting your allocation may be a difficult task if you are not an algorithmic trading buff or an investing expert: you have better things to do, right? We have built the algorithms according to a very simple and core idea in investing; Diversification. The returns of the three algorithms that are live have a very low correlation between themselves. This means that if you allocate investments across the three, you are diversifying and with that lowering your risk. The algorithms also have their own internal mechanisms that will increase and decrease exposure and these mechanisms are built on different 'concepts'. This means that individually, each algorithm has it's own trading goals and sometimes one algo may mistime an investment decision but, using them as as mix, or ensemble, the others would most probably compensate for each others mistiming. Essentially, not only are your investment allocations diversified within each algorithm and what they buy, but each algorithm is different in how they go about it!

So does it matter what allocation you choose? Yes it does. To start you off we've created 2 pre-sets that you can choose from, more about that later. Or, you also can invest in one algorithm only, which we call Expert Mode (see below). By spreading your investment across the three algos using one of the pre-sets, you ride the ups & downs of all three, and our backtests indicate investors will probably have a smoother investment run by choosing a pre-set. As long as you put a meaningful percentage across all three algorithms investors should get the benefit of the previously discussed diversifications. The great thing is that anyone can change as often as they like and if someone feels a certain mix is better, they can change it in the App and we will take care of the technical side of things.

Note that, any sale of units at a profit will likely incur a capital gains tax (CGT) event. Learn more about tax here.

Two Allocation Pre-sets, one Expert Mode

Learn more about them in Allocation Pre-sets

If you prefer to take your investment journey in your own hand without becoming an algo coder, enter Expert Mode; you can choose your investment allocation across the algorithms to suit your individual risk-return profile or investment style. Investors can put some of their funds into USD cash and change the percentage of their investment across the three Algorithms. In Expert mode, investors can cover the whole risk universe from very conservative (everything in USD Cash) to very aggressive (100% in the highest volatility algorithm).

We are working on an automated rebalancing feature. Let us know if you like this idea. Submit your thoughts via feedback@unhedged.com.au. We'd love to hear from you!

Links to related articles:
The Algorithms
Allocation Pre-sets

Quants are Quantitative Analysts who use computer algorithms based on mathematical models to identify profitable trading opportunities.
Rebalancing involves the sales of units, usually at a profit therefore rebalancing will likely involve a capital gains tax (CGT) event.

Information contained here is prepared by Unhedged Pty Ltd ACN 646 421 730 (AR 001288751) an authorised representative of Cache Investment Management Pty Ltd ACN 624 306 430 AFSL 514 360. Units in the Unhedged Fund are issued by Melbourne Securities Corporation Limited (ACN 160 326 545 AFSL 428 289). All information is general information only and doesn’t take into consideration your personal circumstances, financial situation or needs. Before making a financial decision you should understand the risks and read the relevant PDS and TMD and consider whether the product is right for you and seek advice if necessary. Any information contained here may have been automatically generated by an algorithm based on raw data inputs and has not been independently verified and is subject to change. Past performance is not indicative of future performance. Unhedged Fund APIR Code: UPL9838AU International Securities Identification Number (ISIN): AU60UPL98384. Copyright (C) 2022 Unhedged. All rights reserved.
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