The Nerdy Stuff

Tailored Portfolios

When you become an Axos Invest client, we will ask a few questions to determine your preferences as an investor and build your recommended portfolio of ETFs in different asset classes. Your portfolio will be designed by our investment team and built to maximize after-tax, real investment returns while providing a personalized approach for your individual investor preferences.

We then automate the process every step of the way: from investing your funds, to monitoring your progress, to reinvesting dividends.

Our Investment Strategy

To provide the optimal investment strategy, Axos Invest's investment team focuses on building fully-diversified portfolios while minimizing fees and tax consequences for each of our clients. Our strategy focuses on Modern Portfolio Theory ("MPT"), which provides the framework for combining securities in a portfolio to generate the highest returns possible at a given level of risk. This is achieved through a focus on diversification - the process of building portfolios with asset classes and securities that should move independently of each other.

Finally, we constrain the weightings of individual holdings to ensure a fully diversified allocation. This ensures no portion of our clients' portfolios will ever represent an illogically large (or small) percentage.

Investment Mix

We begin our investment process by identifying the best global asset classes to build each model portfolio. To do so, we analyze each asset class' potential return and sensitivity to different economic scenarios such as interest rate movements, stagnating growth, U.S. dollar strength, and inflation. We then calculate the risk as measured by the volatility of each asset class in order to identify our recommended ETFs for each class, with a focus on those with low expense ratios.

Most importantly, we calculate the correlations across all assets to evaluate how they perform relative to each other. This enables us to construct portfolios of complementary holdings so the volatility, or risk, of the entire portfolio is lower than it would be if we constructed portfolios of correlated assets. Finally, we stress test each portfolio to evaluate performance across different market cycles.