PHILOSOPHY

INVESTMENT PHILOSOPHY

We construct multi-manager diversified portfolios, utilizing a distinct combination of sub-asset classes to optimize net of fee, risk adjusted returns. IIM portfolios are developed through a rigorous research process and create value through controlling risk as both market conditions and risk tolerance change.

 

01 / Broad Diversification

Our portfolio construction goes beyond determining the mix of equity and fixed income by allocating to sixteen sub-asset classes to better adapt to client's evolving needs. Sub-asset classes within equity securities are diversified across geography, industry, market cap, and style. Sub-asset classes within fixed Income securities are diversified across geography, entity, quality, and duration.

02 / Dynamic Design

Since each sub-asset class has a different risk-return profile, we proportionally adjust risk within each sub-asset class along the stated investment horizon. Further from the objective an investor can expect increased proportional exposure to sub-asset classes with higher volatility to optimize growth and closer to the objective can expect ​increased proportional exposure to sub-asset classes with lower volatility to optimize preservation of capital.

03 / Multi-Manager Approach

Preferred active and passive managers are selected for each sub-asset class. Passive managers are selected based on low management fees and low tracking error. Active managers are selected based on several factors including: portfolio manager tenure, investment process, low style drift, and ability to generate positive alpha over full market cycles.

04 / Continuous Monitoring

Review of sub-asset class design and preferred managers to ensure stated objectives are being met. We are regularly researching new asset classes as potential investments to be added to portfolios in the future.

IMPLEMENTATION PHILOSOPHY

During implementation, we optimize the sub-asset classes to specific client objectives.

 

01 / Determine Risk Tolerance

When determining risk tolerance, or the variability in investment returns an investor is willing to withstand, we look at two contributing factors: 1) individual values and risk aversion, and 2) when the money is needed. We determine risk tolerance through an interview and questionnaire completed in our initial meeting.

02 / Set Portfolio Weights

Set the weighting of each sub-asset class to align with the determined risk tolerance - investors  with a higher risk tolerance will have higher exposure to equity securities and a lower exposure to fixed income securities, then those with a lower risk tolerance.

03 / Rebalance Strategically

Periodically, we sell securities that have performed well and buy under performing securities to bring the asset allocation back in-line with the original sub-asset class weights. This creates value for clients in three ways: keeps the original level of risk in the portfolio steady over time, creates a higher probability of buying an undervalued security and selling an overvalued security, and decreases average cost basis over time.

04 / Decrease Risk

As the time horizon of the money allocated for a particular financial objective approaches, the original risk tolerance and portfolio weights will no longer be appropriate. To make sure we decrease risk in the portfolio as the date client’s need the money approaches, we shift the portfolio to a more conservative allocation.