ProAuctum constructs investment portfolios that are designed to maximise financial growth.  The theory behind the construction of these so call Growth Optimal portfolios is firmly rooted in Markowitz efficient portfolio tradition where portfolio risk is minimised for a given level of expected investment return.  However, because of their emphasis on maximal growth, Growth Optimal portfolios usually occupy a position at the upper end of the return/risk spectrums.   

High growth portfolios have an obvious attraction for many investors.   Advantages of investment funds composed of Growth Optimal portfolios include;

• Rapid expected growth of fund value
• Low correlation with other assets or funds
• Low management costs

The specific composition of Growth Optimal is determined by an optimising algorithm that maximises expected portfolio growth.  To undertake this task the algorithm requires estimates, for each of the companies in the investment set, of expected returns and covariance of returns.  The ProAuctum strategy is to use historical data for the previous year to provide these estimates.

The structure of a Growth Optimal portfolio dictates  that of all possible portfolios it is the Growth Optimal portfolio that alone minimises the expected time taken for a portfolio to reach any given terminal value.  While this property makes Growth Optimal portfolios attractive to investment the portfolios do have an obvious detraction.  Growth Optimal portfolios exhibit high return volatility.

ProAuctum employs two strategies to moderate return risk.  First, ProAuctum limits its investment focus to the largest companies.  For example, the ProAuctum Australian fund chooses its investments from those companies that are included in the S&P ASX 100 index.

The second strategy employed by ProAuctum to reduce portfolio risk is to increase the emphasis on lowering portfolio risk in the Growth Optimal portfolio selection algorithm.  This slight modification to the classic portfolio selection algorithm results in a decrease in portfolio risk by increasing the number of assets held.  A ProAuctum investment portfolio typically contains three to five included assets.

The purpose of the site is to provide information as to the efficacy of the Optimal Growth Portfolio investment strategy. Note that ProAuctum is not licensed to provide investment advice nor does seek it to do so.

ProAuctum does not seek to obtain investment funds.