Our Philosophy
Asset Allocation for Diversification
Asset allocation relates to how an investment portfolio gets spread across different asset classes. These asset classes may include equities (stock), fixed income (bonds), cash equivalents and alternatives. An asset allocation is used as a diversification mechanism and an optimal blend of different assets can sustain a portfolio in both good and bad economic times. Asset allocation plays a vital role in outperforming the market over time.
Fund Selection for Excess Return Creation
Fund selection is about creating alpha by selecting funds that generate excess returns over a long-time horizon. It may also entail selecting the most appropriate fund based on the current market cycle. Creating a portfolio that constitutes a blend of funds from different asset classes with different investment disciplines is an important aspect of portfolio creation. Our fund selection process includes vetting the manager, strategy and discipline of each fund.
Portfolio Rebalancing for Risk Management
Portfolio rebalancing is the process of placing trades to return a portfolios asset allocation back to its original asset weightings. The original weightings are intended to match an investor's tolerance for risk and desire for reward. Over long periods of time, portfolio rebalancing can noticeably affect the risk and return profile of a portfolio and so it’s a vital part in our process of portfolio creation and maintenance.
Trade Monitoring for Tax Advantages
Trade monitoring evaluates a portfolio’s tax lots to determine the best time to sell an investment for tax purposes. There are many factors that play into a taxable event, and they include the holding period, investment vehicle, account type and IRS rules on wash sales. Monitoring trades for tax efficiencies is important as it can boost the net return of your portfolio over the long run by potentially reducing your tax bill in both the short and long run.
Macro Research for Changing Cycles
Macro-economic research deals with the performance and behavior of the aggregate economies. Because economies go through different cycles and because each cycle effects certain asset classes differently, it’s a critical part of our investment process to identify potential changes in the cycle. By identifying the asset classes which perform better or worse in the current or upcoming market cycle, we have the opportunity to increase the return and/or reduce the risk within your portfolio.