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Performance of Asset Allocation System

Visitor: You spoke of "High Performance - Low Maintenance" Tell me about the track record?

Routemaster: As this is a new RouteMap added in 2011, we do not have a track record for it, but we are confident that it should work well, because its strategies are derived from the other long-established successful RouteMaps and we have already found how well they can be combined into our Asset Allocation System.

The chart above shows the results of that approach when compared to simply buying equal amounts of the bond, forex and stock markets of every country analysed in the respective RouteMaps. As can be seen, it beat all three underlying asset classes, so the results are much better than random. Since the past decade happens to be one where unusually the safest assets, namely bonds, also performed best, this was a particularly challenging task.

Here it is important to note that the performance is based on live recommendations made at the time, not back-tested to optimise the formulas with the benefit of hindsight. This record goes back to 2000, when the FSA first authorised us, so it covers a wide range of market conditions ranging from bubbles to crashes, and does not conveniently start after a bad patch.

If it works for conventional assets, it should also work for alternative assets, because we have found that these alternatives actually reflect the same influences. Indeed often the strategies are exactly the same.

As the other long-established RouteMaps have shown, the combination of individually effective investment strategies often results in a geometric improvement in performance. That is how such results are achieved. Since going live we have extended this principle, revising the formula to include ever more strategies. The subsequent good real-time performance confirms the principle in practice. Hence "High Performance".

Of course, past performance is no guarantee that these strategies will continue to work. Different strategies fail in different circumstances and all of the strategies fail for some of the time. Nevertheless until human behaviour changes, past performance is  the best guide to the future.