Rev. Date June 21, 2022

What is the purpose of this feature?

Asset Growth Simulator was designed to help subscribers estimate how portfolios and investments might grow in value over time.

How does it work?

Asset Growth Simulator projects the value of an investment or portfolio at various confidence levels given the portfolio’s forecasted risk and return. The simulation assumes a starting hypothetical portfolio value of $10,000 for illustrative purposes.

Exhibit 1: Logarithmic Scale

Exhibit 2: Linear Scale

The Asset Growth Simulation chart is fully configurable (see Exhibit 3): up to 5 lines can be displayed at different return percentiles to reflect the range of potential growth over a configurable time horizon (up to 30 years). The asset growth can be visualized on either a logarithmic scale (see Exhibit 1) or a linear scale (see Exhibit 2).

Exhibit 3: Block Configuration

Is this the same as a Monte Carlo simulation?

The Asset Growth Simulator uses a closed form analytical solution. Using equivalent parameters, the output of this model produces similar results to a Monte Carlo simulation.

What are the assumptions of the simulation?

  • The Geometric Brownian Motion has a closed form analytical solution:

  • The portfolio’s return follows a random walk. The expected returns of the portfolio are independent of the value of the process (NAV).

  • The volatility is constant.

  • The path of NAV is continuous.

  • All dividends are reinvested.

  • No capital contribution or withdrawal to and from the portfolio.

This document highlights certain aspects of this feature. As an overview, it does not discuss all material facts or assumptions. Please see Important Disclosure and Disclaimer Information.

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