1. What exactly is a “model” portfolio?
A model portfolio is a fictional account that does not include actual assets under management and is typically presented as an ideal combination of securities for a client’s portfolio. It is sometimes known as a “paper traded” portfolio because no buy or sell orders are placed by the manager. Although the firm may have clients with actual portfolios that follow the underlying investment strategy and hold identical securities, a model may vary in regards to security pricing and the timing of buys and sells. As a result, a firm may not have any client portfolios that precisely mirror the model. Continue reading Top Ten Questions about Model Performance