Custom Asset Classes

Enabling Custom Asset Classes

RightCapital offers access to use customized asset classes in addition to the standard asset classes shown.

Custom Asset Class functionality includes the ability to:

• Add additional asset classes under existing asset categories

• Add additional asset classes under the 'Other' category to reflect specific models/investments

• Customize correlations between asset categories, including the 'Other' category

• Adjust volatility assumptions for existing and custom asset classes

Impact on Monte Carlo Simulations

When Custom Asset Classes are enabled, we use a different model to generate Monte Carlo scenarios. This is to account for the flexibility provided for updating volatility and correlation assumptions. This granular approach utilizes a standard log-normal distribution model. If you enable Custom Asset Classes, you may see different results for existing plans.

How to set up custom asset classes

1

Navigate to the Gear Icon > Admin tab.

2

Click on Add and select the asset category where you want to add the new asset class.

3

Name the asset class and click Save to add it:

4

Once the asset class has been added for your firm, select the Assumptions > Asset Return tab to update the return and volatility assumptions associated with that (or any other) asset class:

Using Custom Asset Classes to reflect additional asset classes within models

Use the Custom Asset Class functionality to reflect different asset classes in the asset allocation models used in RightCapital. For example, if you differentiate bonds by duration rather than the sector in your models, add asset classes to reflect categories such as 'Short-term Bonds' and 'Long-term Bonds', and you can update the return/volatility assumptions for those asset classes. Use this to reflect more granular investment classes or alternative asset classes.

Using Custom Asset Classes for tactical models or custom investment strategies

Differentiate yourself from the competition using the Custom Asset Class functionality to illustrate the client's investments in a tactical or dynamic model that may change over time. Add additional 'asset classes' under the 'Other' category to reflect the strategies used, along with associated returns and volatility numbers:

Reflect client's current investment in your custom strategy.

For clients currently invested in your strategy, allocate their investments to that strategy by adding a manual investment account and assigning the value to that asset class:

Investment Mapping

Funds that are mapped will not be mapped to any custom asset classes - they will only be mapped to the default asset classes. This includes tickers entered directly, accounts linked via integration or account aggregation, or model portfolios linked from Nitrogen.