Portfolio Construction


Efficient Design

Upon the review of a customer’s tolerance for risk and liquidity needs, we construct an asset allocation model that consists of cash, bonds, equities and, if applicable, alternatives.

The cash and bond component is structured around a customer’s need for liquidity, current tax situation, and the current interest rate environment.  Bond allocations emphasize the preservation of capital and maximizing after-tax income.  We utilize CDs, U.S. Government Securities, Municipal Bonds and Corporate Bonds to implement fixed income exposures.

The equity component of a portfolio is designed to provide growth and income.  Our equity model is constructed around specific asset classes whose historical correlations have been relatively low.  Our modeling and construction of the equity component centers around an accepted level of risk as measured by Standard Deviation (volatility).

For those that qualify, adding alternatives exposure can greatly enhance the overall risk profile of an investment portfolio.  This asset class has historically provided very low correlations to global equity markets.

Efficient Implementation

So we can save money for our clients, we have to find a more efficient means of implementing the design.  Our exposure to the asset classes we select is achieved through investing in Exchange-Traded Funds (ETFs).  Today, ETFs are the most efficient means of accessing the asset classes we choose to invest in.  They are efficient from a fee and tax standpoint.  If a more efficient means becomes available, we would migrate.  Creating a low-cost investment portfolio is important to our customers as it greatly enhances performance over time.  For customers that meet certain minimums, we will absorb all transaction costs.