An organized portfolio management strategy should be about diversification* and consistent monitoring to keep all the pieces fitting together.
Just as there is no one right way to solve a six-sided puzzle, there is no one-size-fits-all approach to portfolio management. Based on your financial objectives, risk tolerance, unique circumstances and timeline, we guide you in developing a personal asset allocation* strategy – and adjusting it as time goes by. We believe establishing and managing an appropriately diversified portfolio is key to long-range success as your life and the world around us changes. Over time, your portfolio can benefit from a consistent and disciplined approach to investment decision-making.
We also monitor your portfolio on a regular basis to determine whether changes need to be made in your asset allocation or choice of investment options. Based on your goals and personal situation, we allocate your assets to manage risk and rate of return, as well as to help capitalize on market conditions.
Asset allocation is the process of selecting a mix of asset classes that closely matches an investor’s financial profile in terms of their investment preferences and tolerance for risk. It is based on the premise that the different asset classes have varying cycles of performance, and that by investing in multiple classes, the overall investment returns will be more stable and less susceptible to adverse movements in any one class.
All investments involve some sort of risk, whether it’s market risk, interest risk, inflation risk liquidity risk, tax risk. An individualized asset allocation strategy seeks to mitigate the risks of any one asset class though diversification and balance.
When done properly, an investor’s allocation of assets will reflect his desired goals, priorities, investment preferences and his tolerance for risk. Asset allocation is an individualized strategy, so there really is no perfect mix of assets. Each individual’s strategy is built on the careful consideration of the key elements of their financial profile:
Investment Objectives: What it is the investor hopes to achieve using his investment dollars – improve current lifestyle; achieve capital growth; fund a specific goal, such as a college education
Risk Tolerance: This reflects the investor’s comfort level with market fluctuations that can result in losses. Inflation risk and interest risk need to be considered as well.
Investment Preferences: An investor may prefer one asset class over another based on a certain bias or interest towards the characteristics of that class.
Time Horizon: The length of time an investor is willing to commit to achieving his objectives.
Taxation: Investing in a mix of asset classes will have varying tax consequences.
A sound asset allocation strategy includes periodic reviews.
About the only certainty when it comes to the financial markets is that they will change, and so will your financial situation. Through market gains and losses, a portfolio can become unbalanced and it may be important to make adjustments to your allocation. As people move through life’s stages their needs, preferences, priorities and risk tolerance change and so too must their asset allocation strategy.
Asset allocation, which is driven by complex mathematical models, should not be confused with the much simpler concept of diversification.
*Using diversification and asset allocation as part of your investment strategy neither assures nor guarantees better performance and cannot protect against loss of principal due to changing market conditions.