Through the years, we've become aware that some people are especially proficient in using our tools. Designer Models is a marketplace that permits advanced users of Portfolio123 to share the results of their models with other subscribers, get rewarded by their work, and keep their strategy private. Every Designer has a different niche. Some may be experts at discovering value, others at minimizing draw-down, and so on. By subscribing to a Designer Model you are effectively tapping into years of experience and know-how in an easy to use format.
What makes Designer Models different?
While there are other sites that offer opportunities to follow strategies created by others, Designer Models are unique in that they reside on Portfolio123, a reputable platform designed specifically to create and test investing models. We impose a set of constraints on designers of strategies to make these models realistic and tradeable by regular investors. Designers are paying members of Portfolio123 that, through the years, have refined their model design skills and profited.
How can I become a Designer?
In short you need to have a subscription to Portfolio123 that allows it. These include any Asset Manager or Research subscription or an Individual subscription of Portfolio level or higher. You can get more information on how to become a Designer here.
Is the performance real?
No, the models are not actual brokerage accounts, but we do everything we can to make the results attainable by someone following the trades. For example, we disallow editing of past transactions. Trade prices are updated on an ongoing basis by the system at a pre-set ongoing time, such as the close of the day or next day's open, to enforce no look-ahead manipulations. Day-trading is not allowed. Finally we impose realistic slippage & transaction costs for all Designer Models.
How much does it cost?
The cost of Designer Models is set by the designers. They charge a monthly subscription fee, collected by Portfolio123. That fee varies, and can be found on each model's page.
Do I have to be a paid Portfolio123 subscriber to follow Designer Models?
No. You can follow any Designer Model without being a subscriber to any Portfolio123 premium membership. You must, however, have a registered account at the site.
How do I invest/follow a model?
The model will start from a certain position, which will be a number of holdings and a percentage allocated to each holding.
There are two ways to begin investing in a Designer Model: First, you can just jump in, buying all the positions at their target allocations. This will be similar to investing in a mutual fund.
Second, you can invest in the buy rules as they come up, selling only when indicated. The idea behind this is that the most recent buy recommendations will be fresher than the holdings that have existed in the portfolio for a while. This is closer to following a guru's advice.
Which to use is a matter of personal preference. Once you've started investing, then we'll send you a list of recommended transactions whenever the model rebalances. Use your broker to buy and sell the stocks in the email and you're done!
What are the key things that will help me choose a model?
First, you should pay attention to the designer behind the model. Many will link to articles they have written or to philosophies of investing. Read their comments on our forum or through any other sources (e.g. blogs) they might use. The closer that their thoughts are to your own, the more that you'll be comfortable with their systems.
Pay attention to the risk metrics. Look for models with risk profiles that meet your needs. Volatility, drawdown, and the Sharpe and Sortino ratios will provide lots of information on how much risk each model assumes.
Look at turnover. While one might consider this as part of the risk metrics, it is also a practical indicator of how much time you might need to devote to following the model. Consider also that there may be tax implications of high turnover strategies. You might think very differently about a model intended for use in your IRA than in your cash account.
Finally, look at how the model performed since it was launched. Once a model goes live, the designer has no control over it aside from the ability to make infrequent, minor and fully-disclosed revisions. Portfolio123 tracks how the live model's recommendations have done since launch and communicates this to you by calculating returns under what we regard as reasonable assumptions representative of what subscribers do. Past results are no guarantee of future returns, of course, but it is still important to understand how a model has performed under various real-world conditions.