Computerized Investing > August 18, 2012


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SmartFolio is a sophisticated asset allocation program that individual investors and professionals alike will find helpful when diversifying, optimizing and managing a portfolio. Diversification is essential to any portfolio, but it can get quite complicated, which makes programs such as SmartFolio a valuable tool.

Since we last covered SmartFolio in the Second Quarter 2010 Computerized Investing product update, there have been some improvements to the program worth mentioning. SmartFolio 3.0 introduced the Black-Litterman model for parameter estimation, fully automatic walk-forward optimization, batch importing from Yahoo! Finance and text files, automatic data updating and more. Another important, though often overlooked, feature is that any bugs in the program are fixed quickly and the software is compatible with the latest technology. For instance, when Yahoo! Finance and Yahoo! change or update the websites, which is quite common, the program is also updated quickly, so users don’t receive inaccurate information. Moreover, the program now also works with Windows Vista, Windows 7 and Microsoft Office 2010. For those who have an older version of SmartFolio, the upgrade to 3.0 is completely free.

Although SmartFolio has something for everyone, the program is best suited for serious investors who are willing to study the program. In fact, some users may find the program’s abundance of features a drawback, as it bombards them with information that can be difficult to understand.


Fortunately, SmartFolio provides a variety of guides for users that help them get started and understand the program’s various features. The help guide, under the Help tab, walks users through various features using both text and images, while Getting Started with SmartFolio contains links to five video lessons that help users navigate the program and give them a taste of how many features there really are. For those who would like to literally study the program, the Help tab also contains a 59-page PDF on the theoretical background applied in SmartFolio.

In addition to handling the basics of diversification, such as holding a variety of assets and diversifying equities between sectors, SmartFolio allows users to view the effects of various rebalancing strategies, analyze the portfolio’s efficiency, study asset correlations and much more. Studying correlations is useful for diversifying portfolios in increments, especially because there is little point in having a portfolio with strongly correlated assets. Rebalancing is vital for those who already have a diversified portfolio, as it will maintain the diversification.

Most diversification programs merely offer the basics, while SmartFolio covers the basics and allows users to delve deeper if they wish. One such feature that is essential and distinctive to SmartFolio is the Efficient Frontier. Although other programs may use the concept of an efficient portfolio in their calculations, they tend not to illustrate it, which makes it difficult for users to understand the problem with their portfolio. After users are satisfied with their portfolio, they can graph it in SmartFolio against the efficient frontier, which represents the risk-reward relationship of an efficient portfolio. If a portfolio is below the efficient frontier, it is not efficient, which means the investor is taking on undue risk and should theoretically be able to earn the same return with less risk.

SmartFolio 3.0.85

System Requirements: Windows 2000/XP/Vista/7; Excel 2000/XP/2003/2007/2010 (partially compatible, custom ribbon icons cannot be displayed); at least 1024x768 screen resolution

Size: 20 MB

Price: $199 for one year; $599 for a permanent license; free 30-day trial


George Sturgis from MS posted over 5 years ago:

apple systems softwares deserve some compatibility consideration.

Phillip Devrou from LA posted over 5 years ago:

I am interested an asset alloocation program that will enable me determine what my ccumulativee allocation of indivudal stocks are from inidivual stocks, ETFs, and mutual funds. I own mutal funds in my company 401K buut invest in individual stocks in personal home account. I would lile to see what my total ownership and diversivication is my stock, not just fund. Thank you. Phiil

Frank Thomas from WV posted over 5 years ago:

Check out Morningstar's X-Ray. They provide the 'look-through" analysis you're talking about.

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