Investment Plus: About: Simulation

SIMULATION PLUS
Simulation Plus is sophisticated investment analysis software for any institutional investment fund. These funds have unique characteristics which require analytical approaches adapted to their needs. They must address the specialized areas of establishing a long-term spending policy, forecasting capital contributions and determining investment policy.

Using Simulation Plus the analyst can understand the complex interaction of these factors that will determine future fund values and the ability to meet financial objectives.

Four main factors will influence the future long-term value of an institutional investment fund: (1) Investment Policy, (2) Spending policy, (3) Future Contributions and (4) Inflation Rate. All of these important factors are incorporated into the powerful financial forecasting and simulation analysis capabilities in Simulation Plus.

ALLOCATION ANALYSIS
The Allocation Analysis feature is used to understand the present and future allocation of investment fund assets. Simulation Plus can be used to analyze the aggregate total fund and each of the fund's individual investment pools.

Separate investment pools can be specified for each of the separately-managed groups of assets. The allocation can be viewed at the total fund, investment pool, asset class or money manager level.

SPENDING/CONTRIBUTION MODELING
The Spending/Contribution Modeling feature is used to project the investment fund's future cash outflows and inflows. Because Simulation Plus can be used to prepare detailed and accurate cash flow forecasts, the program is also valuable as a capital budgeting tool. Tables are produced which summarize the planning assumptions used to prepare the financial forecasts.

FINANCIAL FORECASTING
The Financial forecasting feature produces detailed year-by-year deterministic projections of all key financial variables. The forecasts are calculated assuming that the expected investment return and inflation rate are actually realized.

The Financial Forecasts are an efficient method of analyzing the median expected future values for the fund. The fund's asset values, cash flows, key financial ratios and asset allocation is projected. A completely flexible report writer allows all of the results to be displayed and printed according to your specifications.

SIMULATION ANALYSIS
The Simulation Analysis feature uses Monte Carlo simulation to develop ranges of possible values for the investment fund's key financial parameters. The simulated results can be produced for each year and all percentiles, or only selected years and percentiles.

The Simulation Analysis can be based on stochastic investment returns and inflation rates. The percentile ranges produced by Simulation Plus make it possible to assess the fund's risk/reward trade-offs.