AllocationMaster: Support:

Is there a web-based version of AllocationMaster?
Yes, AllocationMaster Web is a web-based version of AllocationMaster. AllocationMaster Web is available as an ASP solution or can be customized for our corporate relationships. To learn more about AllocationMaster Web, click here for an overview.

Does AllocationMaster incorporate the 2003 tax law changes?
Yes, AllocationMaster tracks equity dividend yield separately from interest yield and applies the appropriate tax rate to each. Default tax brackets have also been updated.

Which tax rates should I input on the Profile screen and how will they be used in the analysis?
AllocationMaster uses marginal tax rates for both state and federal income tax. These income tax rates are combined with capital gains tax rates to calculate after-tax rates of return. Non-qualified assets will be analyzed on an after-tax basis throughout AllocationMaster.

What is the projection period input on the Personal Information screen and how is it used?
The projection period is the period over which financial forecasts and the Monte Carlo simulation will be calculated. The projection period will default to the longest common time period for the Financial Goals and Contributions.

What types of data are in AssetFinder and how is this data mapped to the asset classes?
AssetFinder contains data for mutual funds, stocks and exchange-traded funds.

Mutual fund data is mapped to asset classes using the investment objectives established for each fund. The mutual fund universe consists of all open-end mutual funds.
Stocks are mapped to the equity asset classes using a combination of market capitalization and price to book ratio. Stocks with a capitalization of greater than $9 billion are considered large; capitalizations of less than $1.6 billion are considered small. The price to book cutoff point between value and growth is determined each quarter by finding the median price to book ratio over the universe of stocks. All stocks with price to book less than the median are considered value, with the remainder categorized as growth. The stock universe consists of all NYSE, AMEX, and Nasdaq listed stocks.
Exchange-traded funds are categorized into asset classes based on the underlying benchmark the fund seeks to replicate.

What types of changes will require me to re-optimize?
Changes to the risk tolerance questionnaire answers, the tax rates, the current holdings, or the holding limits will all force the user to re-optimize. This is required because changing these fundamental inputs invalidates the previous results.

How is the backtest computed?
The backtest is computed based on historical market index data. Each asset class in AllocationMaster has an associated index proxy. These proxy choices can be seen on the Parameters screen in the AllocationMaster module. The historical returns from these proxies are combined in the same percentages as the present and proposed mixes to create the historical backtest results. Backtests are often most useful in illustrating the relative historical volatilities of the two mixes.

What is Monte Carlo simulation?
Monte Carlo simulation is a technique for modeling possible future outcomes. First, a sequence of random number is drawn. Next, these random numbers are applied to a model of the situation we are attempting to simulate. The results are noted and the process is repeated hundreds or thousands of times. Monte Carlo simulations yields probabilities that certain events will or will not happen or that certain levels will or will not be reached.