Portfolio Re-Creation: A Yearly Automated Process with MYTHEO

Tuesday, 22 June 2021
Written by Amirudin Hamid, Portfolio Manager of GAX MD

What distinguishes a robo-advisor from other investment schemes is the automated operations running behind the scenes, utilizing algorithms and Artificial Intelligence (AI). The algorithms and Artificial Intelligence enhance the decision-making process and make investment management more dynamic and robust.

Earlier this month our algorithms activated some changes to MYTHEO’s overall portfolio.

Our algorithms ran a simulation and changed the asset allocations of your portfolio. The change is part of an automated process called "Portfolio Re-creation", scheduled to run once a year. To recap, MYTHEO had its two full years of service in June 2021, so this is the second time the Portfolio Re-Creation ran at the start of June every year.

What are the changes made by the Portfolio Re-creation?

As you all know, by investing in MYTHEO you will get a personalised portfolio that is derived by combining the weightage in each of the three functional portfolios: Growth, Income and Inflation Hedge. The distribution of weightage across all functional portfolios varies depending on the risk profile of each investor. For example, an investor might get a personalized portfolio with a combination of 80%:11%:9%, or 24%:52%:24%, or any other combinations based on how he answered the five questions. There are 228 combinations for the "Omakase Portfolio" in MYTHEO which are linked to different levels of risks and investor requirements.

Earlier this month, any investor that chose the "Omakase Portfolio” might have gotten a new portfolio combination. However, investors who chose to customize their own portfolios by determining the allocation across the functional portfolios themselves remain unchanged.

What are the reasons for this change?

In MYTHEO, every portfolio is personalized to match the risk profile of each investor. All of this begins with how you answer the five questions on the starting page. Then, using our proprietary  algorithms, MYTHEO matches your answers to determine the relative importance of your financial objectives into four different criteria:– (1) Return, (2) Risk, (3) Cash Flow Requirement and (4) Inflation Protection.

From this, the final portfolio combination consisting of three functional portfolios, Growth, Income and Inflation Hedge, is created. For example, the investors that emphasize maximizing “returns” will get bigger allocation to the Growth portfolio. While investors that prefer a low risk portfolio and consistent cash flow will be given higher portfolio allocation to the Income portfolio.

Source: Source: MY
THEO White Paper, June 2021

In the process, the algorithms use statistical and economic data to determine the best composition of functional portfolios to find the best portfolio to meet your investment objectives. Every year during the anniversary, we update and refresh these data to better reflect the changes in the market environment. As such, the composition of the functional portfolio would also change.

All the analysis and decision-making in the Portfolio Re-creation is done automatically by the algorithms without any intervention by the human portfolio manager.


MYTHEO is designed for investors to achieve long-term financial objectives by balancing multiple factors, including risk and return. As such, portfolio re-creation is a key step in our portfolio construction, where the portfolio weightage has to be distributed across three functional portfolios to achieve an optimized portfolio blend to meet those objectives, taking into consideration the performance characteristics of each portfolio.

Future performance can never be known with certainty, so, as new market data is observed, those portfolio characteristics must be re-assessed over time, and the allocation re-optimized. MYTHEO's Portfolio Re-creation provides the means by which an investor's portfolio continually remains optimized.

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