Adding Value
In part, the Investment Process is similar to that used by other investment advisory firms. To our holistic approach and our modeling capability we also add the following elements that provide additional value to our clients.
Tactical Weighting
A long-term strategy is created for each client based on a unique allocation of investment assets. A long-term strategy assumes a static economy and static market conditions. Neither the economy nor the investment markets are static.
To the long-term strategy we add the concept of "tactical weighting." As a result of changes in the domestic and international economies and in their markets, we will purposely modify the long-term allocation to take advantage of shorter-term opportunities and to reduce risk. These shorter term moves fine tune the longer-term strategy and make it more responsive to current conditions.
Tax Efficient Investing
We routinely employ tax strategies such as tax loss harvesting, matching gains against losses, the judicious timing of sales and low turnover managers to reduce the impact of taxes for our clients. In addition, each year we hold a "tax conference" with our clients and their accountants to determine the best ways in which to reduce the tax impact from their investment accounts.
Quarterly Reports
Unlike other advisors, our quarterly reports contain information on all of the client's financial assets, not simply those for which we have the direct responsibility. This provides a coordinated approach predictably resulting in better results for our clients.
The quarterly report is a road map of where the client has been, and helps define their course going forward. We typically do not manage all our client's assets, but to understand how the entire portfolio is allocated, we do report on all the client's assets. Our quarterly reports include:
- An economic overview to give context to the financial markets,
- Portfolio objectives and constraints to delineate the parameters under which the portfolio will be invested,
- A target allocation model and a detailed breakdown of all the client's assets to determine if the portfolio is in line with the recommended allocation,
- Tactical weighting considerations,
- A performance summary, including quarter-to-date, year-to-date, one-year annualized and three-year annualized return numbers,
- Analysis of the investment performance of the managers and no-load mutual funds we recommend on an absolute and relative measure,
- Specific recommendations for portfolio reallocation or rebalancing the portfolio when appropriate or necessary,
- Education Memo to explain our investment philosophy and process.
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