Each engagement begins with a thorough due diligence process to review our client’s specific needs. Key considerations include liquidity, cash flow, investment experience, investment goals, and time horizon. Taxes, both income and estate at federal and state levels, are factored into the process. Add to the mix personal income, age, dependents, education, and charitable intentions and the results of the process begin to materialize.
After reviewing the due diligence findings with the client, a formal written investment policy is drafted and used as the strategic compass for a client specific investment plan. The policy outlines the range of acceptable investment options, whether equities, alternative investments, or fixed income, as well as asset allocation and equity sector ranges. At this point, we have an agreement on the accepted level of risk to be maintained in the portfolio and a listing of investments allowed.
All clients want to make money and want the best returns possible, but they also want to minimize risk. One key to success is a diversified portfolio, first by asset class, then by the specific segments of each asset class. Once that is accomplished, we focus on finding the best investment options available. In the equity market we believe this is best accomplished by using a select group of active equity managers, either no-load mutual funds or separate account managers. Our goal is to find very bright, successful, and disciplined investment professionals, and use them to achieve client goals. Manager performance is critical, but so is cost, portfolio turnover, consistent investment style, and approach. A similar criterion is considered when selecting investment options in the alternative space.
The fixed income component is equally critical to any successful portfolio construction, as it provides stability during market volatility. To accomplish this, credit quality must be maintained at the highest levels, and the portfolio must be structured to withstand changing interest rates.