Our project
The only way to feel comfortable in such a deeply personal area as investing is to keep this process under control and even do it yourself. Especially when you are confident that you are doing so with minimal subjective judgment, in the most efficient and cost-effective manner...
IskraIndex presents an online platform for personal investing that utilizes optimized index model portfolios for different risk levels, consisted of asset-classes' ETFs. The core of the project is the construction of the efficient frontier for a set of ETF combinations, representing the best risk-return trade-off.
The ETF universe for the optimization consists of the 10 largest funds representing asset classes ranging from short-term bonds to Private Equity funds, geographically segmented (where possible) into emerging and developed markets.
IskraIndex eliminates the risk of selecting the wrong individual investment instruments (stocks, bonds) by moving to a diversified index level. In addition, IskraIndex expands investment opportunities through asset classes that are difficult to invest in directly, by working with their individual representatives – for example, real estate, commodities, and private equity.
In essence, IskraIndex offers a dynamic model of triple portfolio diversification: within asset classes, across asset classes, and by geographic allocation, all integrated with a built-in risk management system.
Working with asset class indices allows us to operate with return distributions that are the closest to Gaussian (normal) — unlike the return distributions of individual instruments. This, in turn, enables us to rely on the continuity of historical and future probabilistic dynamics, primarily when assessing future correlation relationships. This approach significantly simplifies the optimization process, avoiding numerous assumptions and speculations while remaining within the framework of classical portfolio theory.
The IskraIndex methodology is based on Markowitz's theory, which won the Nobel Prize in Economics in 1990 (Modern Portfolio Theory). IskraIndex has managed to address the main limitation of this theory, which hindered its practical application – the use of historical asset class returns in the optimization process.
Instead, IskraIndex works with expected returns, adjusting the current market return of each asset class over recent periods by the extent of its deviation from long-term historical values. Essentially, this is a probabilistic adjustment that relies on the fact that, in the long run, the risk premium is the same for all asset classes and depends only on their level of risk.
Enhanced with a risk management system, the Iskra Index model identifies optimal combinations of index ETFs on the Risk-Return plane. The regularly performed optimization accounts for macroeconomic shifts and changes in correlations between asset classes, allowing the investor to maintain the best possible investment position.
The combination of the broadest possible set of asset class ETFs and the advantages of the Iskra Index model enables it to deliver superior results compared to retail fixed-allocation ETFs and fixed-risk ETFs also traded on the New York Stock Exchange.
If an investor is a Private Banking client, they are offered a wide range of services, including advisory, tax consulting, insurance packages and other services. However, access to these services often comes with restrictions — such as the requirement to maintain a minimum amount on deposits with that bank or in its investment products. With IskraIndex, the investor can independently choose external services without any limitations, which will cost significantly less than a banking package.
IskraIndex model portfolios allow setting up an investment processes in small Family Offices, Private Banking divisions, and other structures created to manage the capital of one or multiple families. The IskraIndex approach minimizes the problem of investor's distrust in investment products by offering a high-quality solution with minimal costs.
The Iskra Index team consists of CFA charterholders with over 20 years of experience in asset management on global markets, investment products design, development and market promotion.
Andrey Stoyanov, CEO and Project Idea Co-Author
Worked at major Russian investment banks, advancing from an analyst to a manager of mutual funds, pension assets, and individual discretionary accounts. Participated in the development of robo-advisory services for Russian brokerage firms.
CFA charterholder (2015), graduate of the Carnegie Mellon Center for Financial Analysis and Security Trading, holds a Master's degree in Physics.
Dmitry Morozov, Project Idea Co-Author
Worked in the investment banking business (PPF Group, Home Credit Bank) and Private Equity firms, with experience in banking risk management and the development of retail banking products. Has extensive experience in evaluating and developing strategies for fintech companies as part of M&A transactions in the banking sector.
CFA charterholder (2005), graduate of the Prague School of Economics.
iskraindex@gmail.com
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