Delayed Onset Investment Glide Path Simulation

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Solution Overview

Problem

Existing systems for investment glide paths fail to consider delayed onset strategies and historical investment data for generating and simulating investment glide paths, leading to inadequate risk management and return optimization during extended investment events.

Innovation Solution

A method and system for developing, evaluating, and validating investment glide paths that include a delayed onset approach, featuring an extended fixed allocation glide path followed by a reallocation glide path, using historical data to simulate projected returns and determine optimal compression rates for asset reallocation, thereby managing risk and maximizing returns.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Reliability

If an age-based asset allocation strategy is used with immediate reallocation from start, then the risk is minimized as the investment event approaches completion, but the return potential is reduced due to premature shifting from aggressive to conservative mix

Engineering Contradiction:

Improverisk managementVSAvoidreturn optimization

Core Design Contradiction:

ReliabilityVSProductivity

Solution Approach 1:

The system performs preliminary simulation and validation of multiple glide path scenarios using historical investment data before implementing the actual investment strategy. This allows the system to pre-determine the optimal delayed onset timing that balances risk management with return potential, rather than immediately shifting to conservative allocation.

Inventive Principle:

Principle #10Preliminary action

Solution Approach 2:

The system implements a dynamic glide path that transitions from a fixed allocation phase to a reallocation phase at a predetermined delayed onset point. This dynamic structure allows the portfolio to maintain aggressive allocation longer than traditional strategies, capturing more growth potential, while still transitioning to conservative allocation before the investment event concludes to protect gains.

Inventive Principle:

Principle #15Dynamics

2Productivity

If a delayed onset investment glide path is implemented with extended fixed allocation, then the return potential is maximized by maintaining aggressive investments longer, but the risk management is weakened during the extended fixed allocation period

Engineering Contradiction:

Improvereturn optimizationVSAvoidrisk management

Core Design Contradiction:

ProductivityVSReliability

Solution Approach 1:

Inventive Principle:

Principle #10Preliminary action

Solution Approach 2:

The system uses historical investment data to simulate and validate glide path performance, creating a feedback loop that informs the selection of optimal delayed onset parameters. This feedback mechanism ensures that the extended fixed allocation period is calibrated to maximize returns while maintaining acceptable risk levels based on learned patterns from historical data.

Inventive Principle:

Principle #23Feedback

3Device complexity

If existing systems use traditional age-based asset allocation without delayed onset, then the risk is managed through immediate reallocation, but the complexity of the system is reduced by avoiding historical data simulation and validation

Engineering Contradiction:

Improvesystem simplicityVSAvoidinvestment performance

Core Design Contradiction:

Device complexityVSProductivity

Solution Approach 1:

The system creates simulated copies of historical investment scenarios and glide path trajectories to validate performance before actual implementation. By copying and testing multiple historical market conditions through simulation, the system can optimize glide path parameters without requiring complex real-time decision-making, thus improving performance while managing complexity through pre-computed strategies.

Inventive Principle:

Principle #26Copying

4Measurement precision

If historical investment data is used to simulate multiple glide paths, then the optimal strategy can be determined through validation, but the computational time and resources required increase significantly

Engineering Contradiction:

Improvestrategy validation accuracyVSAvoidcomputational time

Core Design Contradiction:

Measurement precisionVSLoss of time

Solution Approach 1:

The system performs simulation and validation on a selective basis rather than exhaustively testing all possible glide path variations. By focusing computational resources on validating the most promising delayed onset scenarios identified through preliminary analysis, the system achieves sufficient validation accuracy without requiring excessive computational time for complete enumeration of all possibilities.

Inventive Principle:

Principle #16Partial or excessive action

Data Source

PatentUS11288747B2Method, system, and computer program product for developing, evaluating, and validating investment glide paths

Publication Date: 2022.03.29 CEREBLY INC

AI summary

A method for developing, evaluating, and validating investment glide paths for an investment event having an expected first duration includes: generating, with at least one processor, execution logic associated with at least one delayed onset investment glide path associated with the investment event and having the first duration, the at least one delayed onset investment glide path including: (1) an extended fixed allocation glide path, the extended fixed allocation glide path at a beginning of the delayed onset investment glide path, and (2) a reallocation glide path, the reallocation glide path immediately following the extended fixed allocation glide path and continuing for a remainder of the first duration; and automatically initiating, with at least one processor, execution of the at least one delayed onset investment glide path according to the execution logic.