Better Risk Management


Actively Managing Risk Using Data and Technology.

We use cutting-edge technology and the latest research on capital markets and financial econometrics in order to regularly monitor the risk in your portfolio. If required, we make adjustments to your portfolio to keep its risk in line with your individual risk category. Instead of using static weights for different asset classes to approximate a certain degree of risk, we measure risk itself and adopt a fluid approach to asset class weights to ensure your portfolio truly reflects your desired risk exposure.

Our risk management technology enables:


Better control over your downside risk, which at the same time improves risk-adjusted returns.


A better understanding of the actual risk in your portfolio.

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More peace of mind by limiting unexpected portfolio fluctuations, helping you to stay invested.

Watch our videos on risk management to find out more about why risk management is possible and how it is practiced at Scalable Capital to achieve better risk-adjusted returns.

When investing, your capital is at risk. Learn more about risk here.

"The essence of investment management is the management of risks, not the management of returns."

Benjamin Graham, investor and mentor of Warren Buffett.

Step 1: You Decide How Much Risk You Want to Take.

Risk is the currency to buy long-term investment return. Or in other words: returns are the reward for taking (some, or a lot of) risk. Contrary to most other providers, our clients can decide exactly how much risk they want to ‘put on the table’. Whether low risk, with correspondingly low return opportunities, or a higher risk with higher return potential.

The chart below illustrates the relationship between risk and reward as you move up our risk scale from 3%-25% downside risk.

Long-term return potential increases with higher downside risk

The annual downside risk measures what loss is not to be exceeded with a probability of 95% over the course of a year. For instance, a portfolio in a 10% risk category will not lose more than 10% in a given year with a 95% certainty. This is known as „Value-at-Risk“ (VaR), a risk measure commonly used in the financial industry.

To learn more about how much additional return you can expect for one additional percentage point of risk, take a look at our investment planner.

Step 2: We Regularly Monitor Your Portfolio.

Your portfolio's risk is regularly and systematically monitored to make sure your portfolio delivers the performance you deserve without breaching your individual risk category. What sets us apart from others is the way in which we measure risk. We use a quantitative simulation framework, which takes the current market situation and the observed behaviour of the different asset classes into account, using large amounts of data to generate thousands of plausible performance scenarios.

If more than 5% of the plausible paths end in a loss greater than your selected downside risk, we change your allocation towards more conservative assets. And vice versa if your portfolio is too conservative and therefore threatens not to deliver the return you are looking for. This doesn't mean that we trade hectically in response to every short-term market correction. Instead, we adjust your portfolio when there is a sustained change in market conditions. That's how we keep risk under control in the long-term.

Monte-Carlo Simulations to Monitor Portfolio Risk

If you're interested in finding out more, we recommend you to read about Monte Carlo simulations in our glossary. To find out why it is possible to predict risk, but not returns, take a look at our section on evidence-based investing.

Step 3: We Adjust Your Portfolio When Required.

The result of our dynamic asset allocation can be seen in the following charts. They illustrate how our systematic model would have historically adjusted the weights of each ETF (Exchange-Traded Fund) in portfolios with different risk categories.

In times of increased financial market risk, the proportion of equity ETFs is reduced (dark areas in the graphic) in favour of government bond ETFs (light areas in the graphic). In a traditional portfolio, the weights of each ETF would have remained constant over time, regardless of what underlying risk this would actually hold.

Government Bonds

Corporate Bonds
Real Estate


The information and images are purely for illustrative purposes and are not a reliable indicator of future portfolio changes.
The changes to your portfolio could differ from the illustration.

Can losses occur which are larger than the specified risk category?

Yes. A loss or temporary negative performance of your portfolio, which goes beyond the chosen value-at-risk (VaR) value, can occur with a probability of 5%. For example, with a VaR of 12% it is expected that with a probability of 5% (i.e once every 20 years) a loss of greater than 12% will occur on an annualised basis.