Portfolio Construction for Fund of Funds Managers

Fund of Funds Portfolio Construction Software

Building optimised fund of funds portfolios requires more than a spreadsheet. AlternativeSoft provides institutional-grade portfolio construction tools — mean-variance optimisation, risk parity, constraint modelling and stress testing — purpose-built for multi-manager portfolio construction.

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Construction methods:Mean-VarianceRisk ParityBlack-LittermanRisk BudgetingMin VarianceMonte Carlo
Hedgeweek Best Risk Management Software
4 Consecutive Years — 2020 · 2021 · 2022 · 2023
150+
Institutional clients worldwide
$1.5tn+
AuM managed by our clients
500k+
Funds in our database
Trusted by
Aberdeen Asset Management•AllianceBernstein•BNP Paribas•Bessemer Trust•Raiffeisen Capital Management•Unigestion•Lyxor Asset Management•Kedge Capital•Lumyna Investments•Progressive Capital•Aberdeen Asset Management•AllianceBernstein•BNP Paribas•Bessemer Trust•Raiffeisen Capital Management•Unigestion•
The Problem & The Solution

The Challenges of Multi-Manager Portfolio Construction

Why Portfolio Construction Is Hard for FoF Managers

Multi-manager portfolio construction requires institutional-grade optimisation methods that standard tools cannot provide reliably.

  • Mean-variance optimisation in Excel is numerically unstable and does not handle realistic institutional constraints
  • No easy way to compare multiple construction approaches (MVO vs risk parity vs equal weighting) side by side with full diagnostics
  • Stress-testing a multi-manager portfolio across historical scenarios requires complex modelling beyond standard tools
  • Rebalancing analysis and transaction cost modelling are manual and time-consuming without specialist software
  • Generating investment committee presentations from raw optimisation output requires significant manual effort every time

AlternativeSoft's Portfolio Construction Capabilities

Professional-grade optimisation with constraint modelling, stress testing and one-click IC output — all in one platform.

  • Full mean-variance optimisation with institutional-grade numerical methods, shrinkage and realistic constraint modelling
  • Risk parity and equal-risk-contribution construction built in alongside MVO with side-by-side comparison
  • Historical stress testing across GFC, COVID-19 and custom macro scenarios before committing capital
  • Rebalancing analysis showing portfolio drift and required trades with estimated transaction costs
  • One-click investment committee presentations generated automatically from optimisation output
Portfolio Construction Tools

Institutional Portfolio Construction for Fund of Funds

Build better multi-manager portfolios with professional-grade optimisation tools.

Mean-Variance Optimisation

Full Markowitz optimisation with shrinkage and resampling. Supports long-only and constrained portfolios robust to estimation error in the covariance matrix.

Risk Parity

Equal-risk-contribution portfolios where each manager contributes equally to total portfolio risk — addressing concentration risk inherent in volatility-weighted optimisation.

Portfolio Constraints

Apply investment policy constraints — maximum and minimum weights, strategy limits, geographic limits, liquidity requirements and tracking error budgets.

Scenario Analysis

Stress-test candidate portfolios across historical scenarios and custom macro shocks before implementation. Understand tail behaviour before committing capital.

Risk Decomposition

Decompose optimised portfolio risk by fund, strategy, factor and geography. Verify the portfolio is genuinely diversified as intended.

IC Presentation Output

Generate investment committee-ready presentations automatically — efficient frontier, selected portfolio, risk decomposition and stress test results.

150+
Institutional Clients
Worldwide
$1.5tn+
AuM Managed by
Our Clients
500k+
Funds in Our
Database
20+
Years of Excellence
Since 2005
How It Works

How to Construct a Fund of Funds Portfolio with AlternativeSoft

01

Define the Investment Universe

Select eligible managers from your shortlist. Set strategy constraints, AUM requirements and liquidity terms directly in the optimiser.

02

Run Optimisation and Stress Tests

Choose your construction methodology. Apply constraints. Run stress tests. Compare candidate portfolios before selecting the allocation.

03

Generate IC Presentations and Implement

IC-ready output generated automatically. Implement the selected portfolio and monitor ongoing risk against targets in the same platform.

Who This Is For

Who Uses AlternativeSoft for Portfolio Construction

Fund of Funds Managers

Build rigorous, defensible multi-manager portfolio allocations using institutional construction methods that withstand investment committee scrutiny.

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Pension Funds

Optimise hedge fund and private market allocations within your broader portfolio using consistent risk budgeting methodology.

Learn more

Endowments

Build diversified alternatives portfolios across hedge funds, private equity and real assets with institutional-grade optimisation tools.

Learn more
Client Testimonials

Trusted by 150+ Leading Institutions

“

AlternativeSoft streamlines many useful performance-based analytics including portfolio optimisation, peer evaluation, and relative analyses. An intuitive platform that is additive to our processes.

Aberdeen Asset Management
Head of Risk Management
★★★★★
“

A practical and user-friendly tool used as part of our portfolio construction and risk management process. Their extensive support and responsiveness provides real added value.

AllianceBernstein
Co-head, Risk Management & Portfolio Construction
★★★★★
“

From statistical analysis on a single hedge fund to portfolio construction, risk analysis and stress testing — one of the most effective and intuitive tools I have handled.

BNP Paribas
Hedge Fund Solutions
★★★★★
Best Risk Management Software
Hedgeweek — 4 Consecutive Years
Best Portfolio Analytics Platform
HFM European Awards
10+ Industry Awards
Recognised since 2005
ISO & GDPR Compliant
Enterprise-grade Security
FAQ

Frequently Asked Questions

AlternativeSoft supports mean-variance optimisation (Markowitz), risk parity/equal-risk-contribution, equal weighting, risk budgeting, Black-Litterman views-based optimisation, minimum variance, maximum Sharpe ratio and Monte Carlo simulation.
Yes. AlternativeSoft supports minimum and maximum position sizes, maximum strategy or geographic concentration, liquidity-adjusted constraints, tracking error budgets, beta limits and custom investment policy constraints applied directly in the optimisation.
Yes. AlternativeSoft supports construction across liquid alternatives (hedge funds, mutual funds) and illiquid alternatives (private equity, private credit, real estate) in the same framework with appropriate treatment of illiquidity constraints.
AlternativeSoft generates automated presentations showing the efficient frontier, selected portfolio position, risk decomposition by fund and strategy, stress test results and comparison of multiple portfolio strategies — exported directly to PDF or PowerPoint.
Yes. AlternativeSoft shows how portfolio drift changes risk-return characteristics over time. You can compare the current versus target portfolio and calculate required trades with estimated transaction costs.
Request a Demo

See AlternativeSoft
in Action

Join 150+ institutional investors who rely on AlternativeSoft to select and monitor funds. Book a personalised demo with our team today.

  • Live walkthrough of the full platform
  • Tailored to your asset class — hedge funds, mutual funds or private markets
  • Q&A with our investment analytics specialists
  • Free trial access available following the demo
  • Dedicated onboarding and implementation support
Hedgeweek Best Risk Management Software — voted by clients 4 years running
Data integrations include:
BloombergeVestmentMorningstarPreqinPitchbookHFR

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