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Portfolio Construction and Risk Management

What We Can Do For You
  • Build portfolios with your risk tolerance in mind
  • Develop an asset allocation that is based on you long term plans
  • Select investments based on our latest research and market outlook
  • Minimize fees when possible
  • Apply separate trading strategies to taxable and non-taxable accounts to minimize taxes
  • Use non-taxable accounts for opportunistic rebalancing
Our Investment Process

Analyze the markets – There are several key factors we regularly monitor to assess the attractiveness of different investments: Economic, Fundamental, Technical, and Quantitative.

 

  • Economic factors describe the health of a local economy. Credit conditions, Federal Reserve policy, tax policy, unemployment statistics, interest rates, consumer spending and trade flows are some of the factors we consider important.

    

  • Fundamental factors are expressed by companies in their earnings reports, dividend policy, profit trends, and growth rates. These data points give us a granular look at economic conditions.

 

  • Technical factors are data points derived from price trends and market behavior. There are large amounts of money that trade in and out of the world markets, so it is important to understand when and where they are flowing.

 

  • Quantitative factors are formulated from an analysis of economic, fundamental and technical data points. They are helpful at filtering through the multitude of data to draw non-intuitive conclusions.

Construct portfolios – Once we have assessed your needs and current market conditions, an appropriate portfolio can be implemented. We typically utilize index funds to minimize portfolio expenses. Portfolios are focused on either total return or tax efficiency.

Re-balance portfolios – Economic and market conditions are constantly changing. We believe in adjusting portfolios to capitalize on these changes rather than sitting passively in fixed asset allocations.

Target Asset Allocation

The asset allocation target will be the most important decision you will make as an investor in a diversified portfolio. It will affect the overall behavior of the combined portfolios as the markets cycle up and down.

Minimizing Internal Expense Ratios

When examining appropriate investments for the portfolios we construct, one of the factors we take into consideration is the internal expense fee. If these fees become too burdensome, they can drag on the performance of your investments.

Consider a hypothetical investment that is expected to return 5% in the current year. If the internal expense ratio is 1%, then your after-fee return would be 4%. In contrast, if a low-fee ETF returns the same performance at an internal expense of 0.15%, then your after return fee would be 4.85%. This is one of the ways we provide value through our investment process.