How We Are Different: We believe in investing with a purpose. This means, your investment portfolio should be designed to give you the greatest probability of attaining your financial goals with the lowest possible risk. Your portfolio is designed with your required rate of long-term return as the foundation, with your individual risk tolerance preference as an important—but not the sole—determining consideration.
Our investment philosophy is based on these foundational principles:
The Role and Use of the Investment Policy Statement
The Investment Policy Statement (IPS) is a document that guides all our investment decisions and actions. Our President, Linda Lubitz Boone, CFP®, is a nationally known author of a book on the topic: Creating an Investment Policy Statement: Guidelines & Templates. We create a unique IPS for every client for whom we manage their investments. Think of it like a GPS for your investment goals. It’s a written statement of your long-term investment objectives to help guide us through tumultuous markets with having a pre-determined action plan. This can help avoid making emotional decisions about the current state of markets.
Asset Allocation is a Central Theme
Asset allocation is the policy decision that determines how much of your portfolio will be invested in the major asset classes of stocks, bond, real estate, alternative investment strategies, and money market funds. In addition to these major categories, we believe it is important to diversify among the investment management styles (value, growth, quality, dividends, size) as well as across industries and geographic regions. Our sophisticated approach can result in more than 14 asset classes from approximately 55 countries worldwide. With this extensive diversification you have the opportunity to benefit from the gains in more segments and can help take the emotion out of trying to be in the right place at the right time.
Alternative Investment Strategies
We believe investing in non-traditional investment strategies can increase portfolio diversification by adding return, reducing risk, or both. The overall goal of these alternative strategies is to provide risk and return exposures to areas that do not depend on the economic cycle (like stocks) to provide returns. We strive to provide access to unique alternative investments that the typical investor may not be aware of or have the ability to invest otherwise. These may include, for example, hedge fund strategies, option strategies, managed futures, volatility-based funds, reinsurance, macro trading, or cryptocurrency.
Implementation of Investment Strategy
Our selection of specific investments supports the asset allocation process. Each investment represents either a broad index approach to a particular market (often the lowest cost option) or a narrow sector of the stock, fixed income (bond) markets, or a unique alternative investment strategy. We combine both passive (index based) and actively managed investments depending upon a variety of factors. By combining a variety of such investments into your overall portfolio allocation, we achieve a well diversified portfolio with broad market exposures and specialized management styles and/or market sectors. We primarily use ETF’s and institutional mutual funds, and we complement these with interval fund investments, direct real estate (REIT) offerings, and special private investments when appropriate such as opportunity zone (QOZ) real estate development funds.
Manager Selection and Monitoring
In those situations when we believe specialized investment managers can enhance portfolio returns, we will use them. Although the incremental returns from security selection are smaller than returns derived from the asset allocation decision1 manager selection and monitoring are an important element in our investment process. Managers who specialize are most likely to offer advantageous returns through a focus on their particular market as experts. Where markets are most efficient, we will use passively managed index funds to reduce management costs. Our investment approach is not tied to any “proprietary” investment in which we receive compensation. We are paid ONLY by our clients. As a Fiduciary, our recommendations must be in YOUR best interest.
Strategic Asset Allocation, Risk Management and Tax Efficiency
Each quarter, we compare your portfolio’s actual allocation to your target allocation percentage. If a variance exceeds the pre-established limit, we rebalance your portfolio to control your exposure to risk. Since we believe that all investments are subject to cycles, this process of re-balancing offers a systematic and disciplined means to help us sell when investment categories have been in favor and to buy when they have been out of favor. Consistently buying low and selling high enhances return while further helping to manage risk.
Most of our clients are in the higher tiers of income taxation, so tax efficiency is an important determinate of each client’s portfolio construction. Our value-added approach includes the following disciplines:
Ongoing Portfolio Management
Markets and our lives change constantly. While our clients’ goals don’t change very often, it’s important to calibrate portfolios to the ever-changing investing, economic and tax landscape. As your personal circumstances change, your plan may need to be modified as well. We leverage technology to help us track and adjust your portfolio when needed. We monitor every investment strategy regularly and will replace or add investment strategies as appropriate. We research and evaluate new asset classes and investment vehicles on an ongoing basis to help add value to portfolios.