Joint research unit 7235

Optimizing portfolios in the illiquid, unlisted market of SME crowdlending

Bastien Lextrait

Portfolio construction for SME crowdloans is challenging. This market is illiquid, unlisted and with scarce historical data of asset development. Consequently, traditional portfolio optimization techniques cannot be applied as is since risks can only be assessed individually and covariance matrices are not available. We propose a new portfolio optimization framework based on estimated risk clustering rather than asset variance-covariance matrix. We first establish risk profiles for each company through SHAP-decomposing its estimated risk. We use correlation-like metrics to compare risk profiles to one another and group similar risk profiles together using hierarchical clustering. We then apply quadratic optimization on the generated groups to minimize risk variance. We simulate investments using real data to quantify our strategy’s return, based on the SMEs market share neglected by banks. Our method overperforms traditional mean-variance optimization adapted at best on our sample, as well as 1/N naive investment strategy which has regularly proven its efficiency. Our method rewards any risk-averse investor profile with higher returns.

AGENDA

Tuesday 3 October 2023

Recherche et Economie et Socioéconomie Politique, des Institutions et des Régulations (RESPIR)

Daniel Zamora Vargas (Université Libre de Bruxelles)

Présentation de l’ouvrage : Welfare for Markets : a Global History of Basic Income” (co-écrit avec Anton Jäger)

Tuesday 3 October 2023

Présentation de l’ouvrage : Welfare for Markets : a Global History of Basic Income” (co-écrit avec Anton Jäger)

Daniel Zamora Vargas (Université Libre de Bruxelles)

Présentation de l’ouvrage : Welfare for Markets : a Global History of Basic Income” (co-écrit avec Anton Jäger)

Thursday 5 October 2023

Groupe de travail Economie Comportementale

Aurélie Bonein (Université de Rennes 1, CREM)

TBA

Thursday 5 October 2023

TBA

Aurélie Bonein (Université de Rennes 1, CREM)

TBA

Thursday 5 October 2023

The impact of climate variability on internal migration in Thailand.

Himani Pasricha

The impact of climate variability on internal migration in Thailand.

Thursday 5 October 2023

Doctorants

Himani Pasricha

The impact of climate variability on internal migration in Thailand.

Sunday 8 October 2023

Professeurs invités

Fayçal Hamdi

Sunday 8 October 2023

Professeurs invités

Tobias Kretschmmer

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