Identify Client Investment Objectives and Risk Tolerance
We begin the investment process by identifying our client’s unique set of facts and circumstances, which helps to establish objectives for growth and income in conjunction with a risk profile. A large part of this conversation is based on establishing a solid relationship built on open communication, education, and trust. Goals can be time and dollar specific and will be prioritized. While risk tolerance is based on the client’s financial ability and emotional willingness to assume risk. The purpose of this method helps us to stay the course and to stick to the investment plan during the inevitable painful periods of high volatility and drawdowns.
Develop Client Investment Policy Statement
We then integrate this information into a written investment policy statement (IPS). The IPS is a highly customized, client-centric strategic guide to the implementation of your investment plan. It functions to provide a roadmap for making future investment decisions as the investment environment and client circumstances change. In addition, it helps avoid overreacting in both good and bad markets while enhancing communication between the investment manager and client.
Build and Manage Portfolio
When an overall strategic asset allocation has been determined based on the client’s objectives and risk tolerance, there will be a target exposure for each asset class and a range around that target. We opportunistically navigate above or below this target depending on our tactical outlook, drawing from historical valuations, market dislocations and macro-economic factors. We actively manage the portfolio in-house, which enables us to keep total costs down. Our discipline focuses on building and managing diverse portfolios allocated over multiple assets classes while seeking to reduce downside risks. Asset classes are utilized in a diversified portfolio context targeting growth, income generation, inflation protection, and portfolio hedging. The majority of investment holdings are liquid and can be quickly reallocated at any time. These asset classes are included in the graph below:
Monitor Markets and Evaluate Investment Results
We monitor market conditions on a continuous and ongoing basis, as well as investment returns and variability to determine whether clients’ portfolios are meeting expectations. Portfolio performance is ultimately measured by the client’s ability to meet their goals, while risk is measured by the portfolio’s volatility or standard deviation. We communicate with clients regularly and believe it is our responsibility to foster an environment of open dialogue and accessibility.
Investing in securities involves risk of loss. Further, depending on the different types of investments there may be varying degrees or risk. Clients and prospective clients should be prepared to bear investment loss including loss of original principal.