User Guide - Fund Mode

iProtect, ver 1.1, Copyright © 2009, Petr Simcak. All rights reserved.

Tap the Help button in Basic Mode to find more detailed explanation.

INPUTS

The Fund mode requires you to know:

1. Money Market Yield - yield to maturity of your Money Market fund

2. Bond Yield - yield to maturity of your Bond fund

3. Money Market Duration - a modified duration of your Money Market fund

4. Bond Duration - a modified duration of your Bond fund

See the monthly factsheets for the respective funds you use for your investments. 

OUTPUTS

You will receive a broader range of investable assets including a broad commodity index and the expected return of this portfolio. It is highly desirable to use a diversified portfolio for each asset class, e.g. ETFs or mutual funds. However, you can invest in any equities or commodities you want. You must then consider the value you have entered in the "Risk Scenario" cell in order to avoid the risk of your diversification being too low.

By using money market and bond funds instead of a zero bond, you have to accept a reasonable interest rate risk even though your Horizon is equal to the average Duration of your funds. The bigger the difference between your Horizon and the Duration, the bigger the risk.

ASSUMPTIONS

You can choose the Equity/Commodity Ratio. Each ratio has a volatility value assigned to it. You can also choose your Confidence Level. These numbers are then used for the Risk Scenario and the Asset Allocation calculation. Remember, you can edit the Risk Scenario manually as well. If you end up with numbers which are too unrealistic, you should change Assumptions to more reasonable values or just quit and re-start iProtect.