Wealth Allocation Framework
- Protect – provide liquidity and protection of principal;
- Keep Pace – generate cash flow for living expenses to sustain lifestyle;
- Outpace – growth towards a long term goal, with some risk control;
- Aspire – seek true growth of wealth and perhaps specific personal goals
Quantifying these objectives through our wealth planning process creates allows us to build an appropriate Wealth Allocation Framework for each client.
Each of our core portfolios serve as a tool to implement a client’s Wealth Allocation Framework.
Market Health Analysis
The construction of each of our core portfolios begins with the research of our Investment Strategy team. In addition we value the input of outside research partners and advisory board members.
We seek to gain a big picture view of the financial markets through the three components of our Market Health Analysis:
- Economic Outlook – what is happening in different areas of the world?
- Valuation – which asset classes are cheap and which are expensive?
- Technical – how are investors actually behaving?
Our core portfolios utilize five key asset classes, each having different risk exposures:
- High Quality Fixed Income (bonds) – interest rate risk
- Credit (high yield bonds) – credit/default risk
- Stocks – market risk
- Real Assets – long-term inflation risk
- Dynamic – manager/strategy risk
By utilizing these asset classes with different allocations for each portfolio, we diversify not only by asset class but also by risk exposure – with each portfolio having set risk parameters (volatility bands).
No Load Mutual funds
The primary tools we use to construct each portfolio are no-load mutual funds – with access to both index funds and actively managed funds. For the latter we seek managers which have a robust, repeatable, and understandable process. We have a thesis for every fund we put in a portfolio, and verifying our thesis is a key part of our sell discipline.