An intelligent and disciplined diversification strategy increases the likelihood of success, although it does not eliminate short-term portfolio volatility.

The largest contributing factor to the variability in performance is the asset allocation decision, that is, the blend of cash, bonds, stocks, real assets and other non-correlated asset classes.  That is the core of our portfolio construction decisions.  The asset allocation, along with other interconnected matters such as tax considerations and the integration of estate planning, can exponentially impact a family’s balance sheet.

The assembly of our portfolio strategies includes a combination of:

• Traditional Asset Classes – Part of our portfolio is assembled with high conviction ideas that include cash, global equity and global debt.
• Low-Correlated Investments – We incorporate a range of daily liquid alternative strategies allows us to access instruments that do not closely move with the investment performance of stocks and bonds.
• Active Portfolio Management – Investment strategies utilizing high conviction, institutional managers we feel can add value to the portfolio by enhancing performance, reducing risk, and/or providing tax efficiencies.
• Passive Strategies – Low cost index based vehicles are utilized in many areas of a typical portfolio in coordination with active management. With the majority active managers not able to beat their own index benchmark, this low expense passive portion of the portfolio serves a great purpose.
• Dynamic Strategies –Daily liquid flexible allocation strategies are often incorporated in portfolios and are able to quickly shift among various global asset classes in search of either performance or safety within global markets.
• “Outcome Based” Investment Vehicles – A portion of many portfolios includes instruments that have “outcome based” investment vehicles.  That is, vehicles that have pre-determined investment outcomes based on the movement of a particular market index.  Depending on the movement of the index, these vehicles provide a defined investment behavior.  These vehicles are typically used to provide a protection of potential loss while capturing the movement of a particular index.

Our portfolios are designed with the intent to either increase long term expected return without increasing risk or, conversely, to maintain risk while increasing possible returns.  While different asset classes have unique risks and return characteristics that diverge significantly in the short-term, our belief is that they are ultimately driven by economic fundamentals and have long-term patterns and a reversion to the mean.