We diversify clients’ assets across the six major core asset classes based on their risk tolerance and individual situations. These are six asset classes:
- Domestic stocks
- Domestic bonds
- Foreign stocks
- Emerging market stocks
- Real estate (through REITs)
- Inflation protected bonds
This is the same model developed by David F. Swensen, who manages the endowment for Yale. This model is also used by other institutional investors, such as Harvard, Princeton, and The Rockefeller Foundation.
We then offer two strategies for filling each asset class in a client’s portfolio: a Value Strategy or an Indexing Strategy.
Our value strategy is the right choice for individuals or organizations looking for maximum returns with minimal risk and cost. We manage the domestic and foreign stock portion of the portfolio according to the investment philosophy used by Ben Graham, Philip Fisher, Charlie Munger, Warren Buffet, Joel Greenblatt and other legendary value investors.
A combination of index funds and low cost ETFs are used for the other asset classes. These funds have a proven track record of out-performing a vast majority of actively managed funds over the long term. We believe this portfolio mix will give clients both diversity and the chance for above average performance. We focus on buying a few excellent companies at low prices for the stock portion while we use index funds to expose clients to other asset classes such as bonds or real estate.
For larger accounts we generally construct custom laddered bond portfolios for the bond portion of the account.
Our index strategy is an excellent choice for those with smaller accounts or a low tolerance for volatility. With this strategy the entire portfolio is composed of low-cost index funds and ETFs, which have proven to be superior to a vast majority of mutual funds over the long term. For clients uncomfortable with owning a few careful selected individual stocks, this portfolio choice offers the best way to build a well-balanced sensible portfolio.