IskraIndex Ideology

Any bank deposit can be considered a type of investment—one with near-zero risk and a guaranteed return. The primary advantage of a deposit is its guaranteed outcome (the return of the principal plus interest). However, for large deposits, this guarantee diminishes because deposit insurance systems worldwide typically have relatively low coverage limits. Another benefit of a bank deposit is its convenience, as an account can be opened in just five minutes via a mobile banking app.

When viewed as an entry-level investment, deposits have alternatives that offer higher expected returns in exchange for removing those rigid guarantees. These alternatives generally take the form of medium- to long-term securities portfolios:

- Low-risk portfolios consist of debt instruments (such as bonds, REPO contracts, and promissory notes) and aim for yields slightly above deposit rates;
- High-risk portfolios include equities and other assets that offer a significantly higher potential return compared to traditional savings accounts.

A balanced, long-term portfolio strategy closely mirrors the savings model of a deposit. Instead of opening a bank account, an investor opens a brokerage account, funds it, builds a model portfolio, and submits trade orders to the broker to execute the strategy either instrument by instrument or as a single block order.

The global popularity of ETFs (Exchange-Traded Funds) makes it easy to build portfolios based on broad asset class indices (stocks, bonds, real estate, etc.). This approach ensures maximum portfolio diversification, eliminating the unsystematic risks of individual securities by combining indices from various geographical segments and asset classes.

Finding the optimal combination of these indices requires mathematical optimization. This process screens tens of thousands of possible combinations to pinpoint the exact portfolio that delivers the highest expected return for any given level of risk. IskraIndex helps investors identify precisely these optimized portfolios.

IskraIndex offers two types of model portfolios: Deposit+ and Idea. The 'Idea' portfolio optimizes assets around a specific, preset investment theme, ensuring that the chosen strategy maintains a fixed or minimum weight in the portfolio, or alternatively, leverages the framework of the Deposit+ portfolio.

Once the model portfolio is generated, the investor simply transmits the corresponding trade orders to their broker to rebalance the live portfolio with the target model.

More details about IskraIndex model portfolios