Portfolio Characteristics

Our portfolios are constructed primarily using mutual funds and exchange traded funds. We believe the diversification benefits provided by these instruments outweigh potential negative characteristics. Using mutual funds and exchange traded funds allows us to construct flexible, globally diversified portfolios with exposure to many different market segments and asset classes. To create an equally diversified portfolio using individual securities would require hundreds if not thousands, of positions. We value simplicity, transparency, and efficiency.

We believe that the biggest enemies to your portfolio and wealth over time are the negative impact of expenses, taxes, and inflation. We are committed to eliminating unnecessary investment costs and identifying tax savings strategies that can significantly improve the chances of the success of your long-term financial plan.

Cost control is of utmost importance, as it has a direct effect on performance. Cost control is one reason that we integrate index funds into our portfolios. There are certain areas however, where actively managed funds can potentially add value over their benchmark index. These tend to be areas where inefficiencies are more likely to exist, such as small cap stocks, foreign equities, long-short, or multi-sector fixed income.

As a professional investment company we have some cost advantages that retail clients do not. We are able to access institutional share class mutual funds. These funds have lower expenses than the corresponding retail share class. Also, we have access to some load mutual funds at net asset value. This means we can invest in these funds without paying any sales charge that a client would normally pay.

For taxable accounts we understand the importance of minimizing tax consequences. While our investment decisions are not solely based on tax implications, we do take into consideration the tax impact of all our decisions. We add an element of tax efficiency in the design and monitoring of these portfolios. Examples would be the use of municipal fixed-income securities and tax-loss harvesting. With these types of actions we are able to minimize as much as possible the tax impact for our clients.