Dynamic Securities Portfolio Segmentation and Trading
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Solution Overview
Problem
Investors in mutual funds lack control over the creation and selection of individual securities within their investment portfolios and are unable to trade these components separately, limiting their ability to manage risk and achieve desired rate of return.
Innovation Solution
Systems and methods for creating and trading dynamic securities, allowing users to select a basket of traditional and non-traditional securities, which can be traded as a whole or individually, with monitoring and notification features to compare rate of return to a pre-determined target.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If investors use mutual funds to create diversified investment portfolios, then investment risk is lowered through diversification, but investors lose control over the creation and selection of individual securities within the portfolio
Solution Approach 1:
The patent segments the investment portfolio into two tradable components: the complete diversified portfolio (mutual fund) and individual securities within it. This allows investors to hold and trade either the whole portfolio or pick and choose specific securities, simultaneously achieving diversification benefits and individual security control.
2Reliability
If investors use mutual funds for diversified investment, then risk is lowered, but investors are unable to sell individual components of the fund separately
Solution Approach 1:
The patent enables the portfolio to be segmented into tradable units where investors can sell the complete fund or individual securities within it. This segmentation provides trading flexibility while maintaining the diversified investment structure.
Solution Approach 2:
The patent creates a dynamic security structure where the portfolio composition can be adjusted and reconfigured. Investors can dynamically add or remove individual securities from the diversified portfolio, allowing the fund to adapt to changing investment preferences and market conditions.
3Ease of operation
If traditional securities trading systems are used, then trading of individual securities is enabled, but investors cannot trade the complete portfolio as a single unit
Solution Approach 1:
The patent merges individual securities into a single tradable portfolio unit while maintaining the ability to trade individual components. The diversified portfolio functions as both a complete investment vehicle and as a collection of separately tradable securities, providing multiple trading options.
4Ease of operation
If investors manually manage individual securities in a portfolio, then control and selection flexibility is improved, but time and complexity of portfolio management increases
Solution Approach 1:
The patent provides pre-configured diversified portfolios that have already been created and optimized by professionals. Investors can select from these pre-prepared portfolios or make minor adjustments, eliminating the time-consuming process of building diversified portfolios from scratch while retaining customization options.
Data Source
AI summary
Systems and methods for creating and trading dynamic securities are provided. Dynamic securities according to the invention may preferably include any security or non-securitized investment. To form the dynamic security, a user may select a plurality of securities including stocks, bonds, baseball cards and modern art paintings to create a dynamic security. The selection may be limited to a pre-determined list of securities.