While most money management is INSTITUTIONAL, we add in the TACTICAL approach to ‘HEDGE THE DOWNS!’ But what does this mean?
The big box money managers follow institutional management which – in simpler terms – means that they design ‘model portfolios’ that will ‘fit’ the needs of different types of investors. So what this means is, conservative investors go into the conservative model portfolio, aggressive go into the aggressive model, and the moderate investors are placed into a model that is somewhere in-between. Now, once your risk tolerance is established, then you are placed into portfolios that ‘fit your risk profile’ and, on a quarterly basis, the model portfolios are rebalanced to their initial allocations of asset classes.
For example, one conservative portfolio may be set at 10% cash, 40% fixed income, and 50% equities in the utilities and consumer staples sectors. Once a quarter has passed, the 50% equities might have grown to be 60% of the value of the total portfolio, so to realign to the original asset allocation, equities will be sold and reinvested into the government bonds, to keep the cash, bonds, and equities percentages as the model was designed. This rebalancing is simply adjusting your overweighted and underweighted holdings back to the model portfolio’s allocations. As you can see, this is very passive and reactive, not preemptive, or a proactive way to manage money. Unless the institution that created the model portfolio changes the model’s asset class allocations, then rebalancing is just an exercise in math – lacking any real management at all.
Tactical asset management is the opposite. On a weekly, even daily, basis, data and algorithms are being analyzed to determine what the current market is and where it is going, and that information is what leads to rebalances and can happen as often as necessary. This management style allows us to quantify a client’s MAXIMUM loss may be based off their tolerance while pursuing portfolio growth, and to hedge the risk up to that maximum acceptable loss. Among other features, you also have access to not only our research team but some of the best algorithm tracking data in the industry, research teams, analysts, and software to be able to monitor and ensure that when major things are happening it is being taken care of and address in a timely manner. In our experience, we have found that people do not pay for information because information is everywhere, people pay for service, for organization and implementation of strategies that are custom to you and nobody else and that is what we can offer.
While there are never ANY guarantees in market investments, we have found this tactical, quantifiable hedge a tremendous tool for our clients, giving them more peace of mind regarding their overall investment strategy, especially during volatile times where the market experiences dramatic changes or uncertainty. So, while we do provide traditional institutional management options, we highly leverage our tactical management capabilities for our clients’ benefit.
