Morningstar EnCorr - Resampling Benefits | Morningstar Australia and New Zealand**NOT USED


AU/NZ

EnCorr


		Overview


		Who Uses EnCorr


		Asset Allocation


		Portfolio Implementation


		Resampling Benefits


		Charts and Reports


		Data Sets and Investment Types

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Morningstar Direct

Diversified. Practical. Sound.

Morningstar™ EnCorr® features a proprietary resampling method that helps create more diversified and risk-optimised portfolios. Efficient frontier graphs may be a valuable method for representing risk-return tradeoffs within a portfolio. But when they come from traditional mean-variance optimisation (MVO), better identifies the range of uncertainty an allocation might actually experience.

Portfolio resampling: Increased diversification for better risk management


Test Portfolio Before Resampling In portfolios created using traditional mean-variance optimisation (MVO) and standard uncertainty parameters, fewer asset classes are represented and changes in weights are more extreme, exposing investors to additional risk. Traditional mean-variance optimisation (MVO) is sensitive to input assumptions.


Test Portfolio after Resampling More asset classes are included after running EnCorr’s resampling functionality, which applies Monte Carlo-like simulations to mean-variance optimisation (MVO). This reduces prediction error and increases diversification, helping investment professionals develop asset allocation strategies that account for real uncertainties clients may face in the market.