Globally Diversified Portfolios
Our Globally Diversified Portfolios (see details below) are broadly diversified across asset classes, investment styles, and mutual funds. They are designed for use as stand-alone "total portfolio" solutions or as the core element of a broader portfolio that may include more specialized holdings such as real estate rental properties. In particular, these portfolios are designed to provide relatively consistent returns when market conditions are favorable, and to limit losses during difficult market conditions.
We specialize in helping clients select the best portfolio for their own unique needs. The main tradeoff is between risk and return. In general, portfolios that contain a higher percentage of stocks are more volatile (i.e., more "risky"), but they also offer higher expected returns over the long term. For many people, the relevant questions to ask include:
Is an aggressive, high-return portfolio really needed to achieve my future financial goals?
How much volatility am I willing and able to accept?
What portfolio would get the job done with the minimum amount of risk?
The answers to these questions are not obvious. We can help sort through the tradeoffs in a logical and straightforward way.
The five Globally Diversified Portfolios summarized below cover a broad range of risk-return combinations. Most people's needs fall within this range. All of our portfolios are designed to achieve specific return objectives over the long-term, but always within specified limitations for risk.
Capital Preservation Portfolio -- a very conservative portfolio specifically designed to minimize declines in account balance during downturns in the stock market. This portfolio is ideal for people who are less concerned about growing the portfolio than they are about retaining access to principal despite poor market conditions.
As
indicated in the diagram above, the
Capital Preservation Portfolio has an expected long-term average return of 6% and contains 5% stocks. Two-thirds of the annual returns for this portfolio are expected to remain within the shaded area, between +2% and +10%. On average, a return outside of the larger rectangle would be expected once every twenty years or so
1.
How is it managed?
Conservative Portfolio -- a relatively low-risk portfolio that emphasizes stability of principal over growth. Generally speaking, this portfolio is suitable for people who have accumulated enough wealth to cover future expenses with only modest concerns about inflation.
As
illustrated above, the
Conservative Portfolio has an expected long-term average return of 7% and compares with a benchmark that contains 40% stocks. Two-thirds of the annual returns for this portfolio are expected to remain within the shaded area, between +1% and +13%. On average, a return outside of the larger rectangle might be expected once every twenty years
1.
How is it managed?
Balanced Portfolio -- a moderate portfolio that in many ways resembles the most common risk profile employed by foundations and other institutional entities. This portfolio is often appropriate for people who are nearing or already in retirement, and who require a portfolio that can offset the eroding effects of inflation.
The
Balanced Portfolio has an expected long-term average return of 8% and is evaluated against a benchmark that contains 60% stocks. Two-thirds of the annual returns for this portfolio are expected to remain within the shaded area, between -1% and +17%. On average, a return outside of the larger rectangle might be expected once every twenty years
1.
How is it managed?
Growth & Income Portfolio -- a moderately aggressive portfolio that finds its most common application during the wealth accumulation years, when money is being set aside out of earned income and invested for later use during retirement. This portfolio is often used during the middle years of saving. It is also used in the early years when there is an aversion to the full volatility of the stock market.
The Growth & Income Portfolio has an expected long-term average return of 9% and is evaluated against a benchmark that contains 80% stocks. Two-thirds of the annual returns for this portfolio are expected to remain within the shaded area, between -3% and +21%.
On average, a return outside of the larger rectangle might be expected once every twenty years1.
Long-Term Growth Portfolio -- an aggressive portfolio that emphasizes long-term appreciation over consistency of returns. This portfolio is based on the historical observation that over long enough investment periods, stock investments produce superior returns. It is often suitable for younger people who have many years of investing in front of them and who are able to tolerate the ups and downs of the stock market, which can be severe at times.
The
Long-Term Growth Portfolio has an expected long-term average return of 10% and is evaluated against the S&P 500 index, which contains 100% stocks. Two-thirds of the annual returns for this portfolio are expected to remain within the shaded area, between -5% and +25%. On average, a return outside of the larger rectangle might be expected once every twenty years
1.
How is it managed?
1 Despite our goal of achieving returns in a consistent manner, portfolios can lose money.
There is no guarantee that a portfolio's objectives or expected results will be met.
Specialty Portfolios
We also offer a series of specialty portfolios in two broad categories:
Alternative portfolios, which use non-traditional and/or highly focused investment strategies such as short selling and convertable bonds.
Asset-class portfolios, which focus on a single asset class, such as US Small Cap Stock.
Specialty portfolios are ideal for supplementing typical 401(k) plans, which are often limited in the number of asset classes offered and therefore limited in the degree of diversification that can be achieved. Please
call or write for additional information.