Application

Broad Portfolio

Broad Portfolio calculates a Markowitz-optimized crypto portfolio for any number of tokens you choose - showing optimal weights, risk metrics, and a historical performance simulation with monthly rebalancing.

Last updated:

Key Takeaways

  • Broad Portfolio calculates Markowitz-optimized token weights for 1-75 crypto assets, maximizing the Sharpe Ratio for the chosen portfolio size.
  • Enter a token count, click Go, and the tool outputs each token's optimal weight, annual return, volatility, Sharpe Ratio, and Sortino Ratio.
  • Two charts show how Sharpe Ratio and Volatility change as the number of assets increases - helping determine the right portfolio size before optimizing.
  • A historical simulation compares the optimized portfolio against a benchmark using indexed values from a shared starting point.
  • SmartCredit.io recommends rebalancing monthly by re-running the optimization with the same token count.

Broad Portfolio is a quantitative portfolio optimization tool. You enter how many crypto tokens you want in your portfolio, and the system calculates the optimal allocation weights using Modern Portfolio Theory (MPT) - maximizing risk-adjusted return for that number of assets.

It is different from Portfolio MCP, which is an AI chat interface focused on interest-bearing strategies across DeFi platforms. Broad Portfolio is a direct, form-based optimizer that works at the token level across the broad crypto market.

How it works

  1. Enter the number of tokens - type a number between 1 and 75. This tells the optimizer how many assets to include in the portfolio.
  2. Click Go - the system fetches market data and runs the Markowitz optimization to find the token weights that maximize the Sharpe Ratio for that portfolio size.
  3. Review the recommended portfolio - the output shows each selected token with its optimal weight and individual performance metrics.
  4. Rebalance monthly - the platform recommends rebalancing once a month to maintain the optimal allocation as prices drift.

Portfolio output

For each token in the optimized portfolio, the tool shows:

Column What it means
Symbol The token ticker
Weight Percentage allocation in the portfolio
Annual Return Historical annualized return
Annual Volatility Annualized standard deviation of returns
Sharpe Ratio Return per unit of total risk
Sortino Ratio Return per unit of downside risk only

Portfolio-level summary stats are shown below the table, including total token count, portfolio Sharpe Ratio, Sortino Ratio, and overall annual return and volatility.

Sharpe and Volatility charts

Two line charts show how portfolio-level metrics change as the number of assets increases:

  • Sharpe Chart - plots Sharpe Ratio against number of assets. The curve typically rises sharply with the first few additions, then flattens - showing the diversification benefit and where adding more assets stops improving risk-adjusted return.
  • Volatility Chart - plots Annual Volatility against number of assets. Demonstrates how diversification reduces portfolio-level volatility, even if individual tokens are highly volatile.

These charts help you decide how many tokens to include before running the optimization.

Broad Portfolio Performance

The page includes a historical simulation chart that compares how the optimized portfolio would have performed against a benchmark over time. Both series are plotted as indexed values (starting from 100) so you can compare growth trajectories directly.

This is a backtested simulation - past performance does not guarantee future results.

Rebalancing

An optimized allocation drifts as individual token prices move. Broad Portfolio recommends rebalancing once a month: re-run the optimization with the same token count, review the updated weights, and adjust holdings accordingly.

Monthly rebalancing captures most of the efficiency benefit of MPT while keeping transaction costs manageable. For more on the theory behind rebalancing, see the Portfolio MCP section.

Broad Portfolio vs Portfolio MCP

Broad Portfolio Portfolio MCP
Input Number of tokens (1–75) Natural language description
Focus Crypto token weights across the broad market Interest-bearing strategies + DeFi platforms
Output Token-level weights, per-token metrics, Sharpe/Volatility charts, simulation Category allocation, platform breakdown, recommendations
Interface Form AI chat
Rebalancing Monthly, re-run the tool Threshold- or time-based, guided by MCP

Use Broad Portfolio when you want a direct quantitative answer: given N crypto tokens, what should the weights be? Use Portfolio MCP when you want to structure a yield-focused portfolio across DeFi platforms with AI guidance.

FAQ

What is Markowitz portfolio optimization?

Markowitz portfolio optimization, also called Modern Portfolio Theory (MPT), is a Nobel Prize-winning mathematical framework that calculates the asset weights that maximize risk-adjusted return (Sharpe Ratio) for a given set of assets. It does this by analyzing historical correlations between assets - two uncorrelated assets together reduce portfolio volatility even if each is individually risky.

What is the Sharpe Ratio?

The Sharpe Ratio measures return per unit of total risk: (Portfolio Return - Risk-Free Rate) divided by Portfolio Volatility. A higher Sharpe Ratio means more return for each unit of risk taken. A ratio above 2.0 is considered excellent for a crypto portfolio.

How does the Broad Portfolio optimizer differ from picking tokens manually?

Manual selection relies on intuition and usually results in correlated assets that don't truly diversify. Broad Portfolio uses historical return and correlation data to find the mathematically optimal combination - the weights on the Efficient Frontier where no reallocation can improve return without also increasing risk.

How many tokens should I put in my Broad Portfolio?

Use the Sharpe and Volatility charts to decide. The Sharpe Ratio typically rises sharply with the first few additions and then flattens. Once adding more assets produces minimal improvement in the Sharpe chart, you have reached the point of diminishing returns for diversification.

How often should I rebalance a Broad Portfolio?

SmartCredit.io recommends monthly rebalancing. Re-run the optimization with the same token count, compare the new weights to your current holdings, and adjust. Monthly cadence captures most of the efficiency benefit while keeping transaction costs manageable.

Blog articles

Further info