Information about Quantext's Portfolio Planners

Quantext Portfolio Planner provides:

  • the ability to see how much risk is in your portfolio
  • the ability to see whether your saving, investment, and retirement income plans are reasonable
  • the ability to determine whether you have a well-diversified portfolio
  • the ability to shape your portfolio to get the best risk/return balance for specific needs
Quantext Portfolio Planner (QPP) is a portfolio planning tool for individual investors and for professional advisors. This tool assists in creating and managing portfolio allocations and planning for the future income draws that can be supported. QPP combines Monte Carlo simulation with sophisticated analytics that generate forward-looking projections for individual assets and for the portfolio as a whole. For more information on the proprietary Monte Carlo engine that drives QPP please see our FAQ on Monte Carlo Analysis.

Many portfolio management software tools are based entirely on the historical behavior of portfolios. The standard of practice in institutional finance, however, is forward-looking portfolio analysis. QPP is a forward-looking portfolio analysis tool. The difference is crucial. Choosing a portfolio based on historical performance alone is like trying to drive by looking in the rear-view mirror. Forward-looking portfolio analysis is not perfect—far from it—but there is an enormous body of research that demonstrates that robust forward-looking analytics lead to portfolios that are more likely to out-perform in the future. We discuss forward-looking models used by institutional investors and the consistency of a number of benchmark results to QPP in this article.

We believe that QPP is the very best portfolio planning and asset allocation tool available--and we have performed an enormous battery of analyses and tests in demonstrating that this is the case. Our articles using QPP-based analysis have been published in a range of publications, including Advisor Perspectives, Financial Planning, and others. We have a series of these articles available for review in our library. While human analysts can develop excellent portfolios even without a tool like QPP, QPP’s quantitative analysis can suggest improvements to even very well-designed portfolios. For a real-world case study, see this paper.

Top

NOTE: Quantext is not a registered investment advisor. No information on this website should be taken as advice to buy or sell any asset. Any and all information obtained from Quantext is on an "AS IS" basis.

What Make Quantext's Tools Special?

Quantext uses a unique proprietary engine for simulating the future performance of portfolios. Other well-known portfolio analysis tools employ shortcuts that assign investments to broad classes (style analysis), but ignore specific details of a position. Quantext’s tools account for and model the specific features of investments, including individual stocks.
  • Quantext's tools account for employee stock options and their impact on portfolio planning
  • Quantext's two versions are simple enough for the knowledgeable individual investor but sophisticated enough for professional advisors
  • Our tools allow users to see how much income a portfolio can be expected to support at a specific confidence level
  • Quantext's basic Monte Carlo portfolio tool, Quantext Portfolio Planner, can be set up and run very easily
  • Quantext's Monte Carlo tools generate clear and intuitive reports that can be easily printed or emailed
  • Our tools allow users to see what QPP would have projected at a given time in the past—such as right before the market crash of 2008, or right after. This capability is helpful in validation studies as well as allowing users to see how their choices might have been different in the past on the basis of QPP’s output
  • The user can easily see the projected risk and return for each portfolio holding as well as for the portfolio as a whole
  • Our reports show you short-term risk measures such as potential loss on a user-defined time horizon (days to months), as well as the long-term projections
Top

QPP vs. QRP

The original version of Quantext's portfolio planning software was called Quantext Retirement Planner (QRP). QRP uses our proprietary simulation engine but also allows the user to choose historical data or to develop input parameters themselves. After years of testing, we concluded that the built-in statistical forecasting engine was so effective that user adjustments were rarely useful. Quantext Portfolio Planner (QPP) is essentially identical to QRP, except that QPP only uses our proprietary simulation analytics and the level of customization of forecast statistics is far more constrained in QPP. In all of our analysis and research papers, we use QPP exclusively. We continue to sell and support QRP because of our legacy users, but we strongly encourage new users to purchase QPP rather than QRP. A detailed overview of the differences between the model versions is listed below.

The differences between QPP(20 or 40) and QRP

QPP, QPP40 and QRP use the same core analytics; they all perform forward-looking Monte Carlo analysis. There are some differences between the planners, however.

QRP was Quantext’s original version of the software and, thus, was given the name Quantext Retirement Planner –though all of the versions, QPP, QPP40 and QRP, have the same retirement planning features. (It’s hard to change the name once so many articles have been written!) The main difference between QPP and QRP is that QRP allows the user to run analysis using: 1) pure historical data, 2) automatically-generated parameters, or 3) customized parameter sets. This means that you could run a portfolio with the basic parameters and then adjust any of the following parameters by hand: Beta, standard deviation, and alpha for the individual stocks or funds. QPP allows the user to adjust many parameters, but it is not as flexible in terms of user adjustments of parameters. Both QPP and QRP allow adjustment with respect to view on future market returns and annual standard deviation, as well as individual stock and fund total returns. Please see the Table of Features below for a more thorough comparison.

The other main difference is the number of tickers that can be used. QPP accepts 20. QPP40 accepts 40. QRP accepts 20 but can handle up to 380 via an indirect method of creating sub-portfolios and then meshing them together. This process is labor intensive and rather time consuming.

Please see the Table of Features below for comparison of adjustable parameters.

QPP is the version of choice for most investors and advisors, limiting the adjustable parameters to those that most advisors or investors might have interest in varying. For the all of our research, articles, and consulting, we use QPP.

QPP40 is an enlarged version of QPP that can handle up to 40 individual positions (more details below).

Top

Which version should I license?

Based on the experience of our users, we suggest QPP for users who have twenty or fewer holdings in their portfolios. We recommend QPP40 for those users with larger numbers of positions.

A license of QPP40 includes a copy of QPP(20) so that the user can study smaller portfolios (or a portion of a larger portfolio) with the faster QPP(20), though on today's machines, the time required to run calculations is small to negligible.

QRP is for those users who want additional flexibility to hand-adjust parameters like the volatilities and Betas of individual positions. QRP is larger (and slower) than QPP. QRP would only be a good choice for users who are experts in statistics, as the users can potentially input parameter sets that are not internally compatible. (QRP gives you a warning if this should happen, but the user will need to be able to understand the meaning of this and right the situation.)

Finally, we note that multiple users have not been able to get QRP to work with Excel 2007 or 2010. QPP runs on all versions of Excel newer than 2000.

Top

Table of Features QPP QPP40 QRP
Accepted number of tickers 20 40 20 -but can accept up to 380 via an indirect method*
Source of statistical projection Quantext's forward looking simulator Quantext's forward looking simulator Quantext's forward looking simulator OR hand adjusted parameters OR a combo of these
Retirement planning capabilities Yes Yes Yes
Correlations Table Yes Yes Yes
Employee Stock Options Tool Yes Yes Yes
Ability to include stock options Yes Yes Yes
Custom Savings Draw Tool Yes Yes Yes
Savings and Income Draw are customizable over time? Yes Yes Yes
Accounts for fund fees Yes Yes Yes
Loads can be input manually Yes Yes Yes
Accounts for splits Yes Yes Yes
Accounts for dividend yield Yes Yes Yes
Shows forward-looking , expected dividend yield Yes Yes Yes
Adjustable view on expected market returns Yes Yes Yes
Adjustable view on annual standard deviation on market returns Yes Yes Yes
Adjustable expected return on individual tickers Yes Yes Yes
Adjustable Beta on individual tickers No No Yes
Adjustable volatility on individual tickers No No Yes
*You can include up to 380 tickers using QRP, but you must use an indirect method. A pdf document with directions for this process is included on the QRP disc, which you receive when you license this product.

Top

Why does QPP limit you to 20 positions?

A portfolio can deliver all of the benefits of diversification across all major asset classes with considerably fewer than twenty positions. For portfolios composed entirely of funds, probably fewer than ten will suffice. We have explored this issue in a range of research articles. Some investors and advisors choose to hold portfolios with a larger number of individual holdings, however. The baseline version of QPP will support up to twenty positions. For investors who hold individual stocks or, for whatever reason, maintain a portfolio with more than twenty positions, QPP40 is recommended. QPP40 may also be the version of choice for users who want to analyze or test relationships between large numbers of securities.

Top