Portfolio optimization is sensitive to the choice of input parameters. Portfolio Lab provides a set of default assumptions based on a simple forward model as a starting point. We recommend that you review these assumptions and adjust them to match your constraints and views.

In the latest release of Portfolio Lab, min/max weights constraints are editable directly on the assumptions table, as shown in red:

 

 

In addition, you may edit the expected returns by either:

  • providing your estimate, directly on the table as shown in green
  • changing the capital market expectations used to calculate expected returns: risk-free rate, equity risk premium

For more information please refer to Portfolio Lab’s user manual.