The most important element in long-term investment programs is the allocation of resources to basic asset classes - stocks, bonds, and money market investments.
We first match specific goals and their time frames to the asset classes most appropriate in terms of expected and potential risks and returns over those periods.
For the portions of the portfolio which are long-term and more general, we work with clients to develop specific target allocations and ranges by examining the range of probable returns over various time horizons. While the future is unknown, clients find it helpful to review some of the possible outcomes.
We recommend indexed mutual funds and exchange traded funds ( ETFs) for at least a core investment in each asset class These are usually the vast majority or the entire recommended investment vehicles in the major asset classes, such as large capitalization, US, or foreign stocks.
In more specialized segments, e.g. high yield bonds, emerging markets, or small companies, we may recommend actively managed portfolios as part of the allocation, but we usually limit that to approximately half of the allocation.
Many clients come to us with portfolios which have been invested in stocks, bonds, and funds which we do not generally use for client portfolios. These holdings, however, have a low tax costs and a sale could result in a tax liability that makes it inadvisable to sell. We can work around these positions and include them in supervised portfolios, although we limit our responsibility for investment oversight of individual securities, as we do not currently maintain the ability to research fully. In such cases, we will rely on third party research provided by companies such as Morningstar.
If you would like more specific information about how to approach your own investments, please contact us.
At our core, we believe that a well-balanced portfolio is more likely to offer positive results for clients. Assets should be distributed between stocks, bonds and money-market instruments based on each clients specific goals and time horizons.