What Is Portfolio Management?

Portfolio management is the art and science of selecting and overseeing a group of investments that meet the long-term financial objectives and risk tolerance of a client, a company, or an institution.*

* https://www.investopedia.com/terms/p/portfoliomanagement.asp

There are two forms of portfolio management: passive management and active management.

Passive management is where you would purchase one or more investments, such as a mutual fund or ETF with the intent of mimicking an index such as the S&P 500. This keeps fees low since there is minimal oversight and trading.

Active management uses a variety of quantitative and qualitative models and other methods to determine what investments should be purchased and sold in an effort to outperform an index like the S&P 500.

Most investors believe that they face a conundrum:

  • Having to assume more risk for greater returns.
  • Take on less risk for lower returns.

Maximize Returns:

Our process for maximizing returns begins with investing at your comfort level for risk. We ensure that you have your investments set-up so that you do not have to worry about market declines in the short term. We call these different investment holdings sleeves. At a minimum, this includes a cash sleeve, a 2-5 year sleeve, and a 5+ year sleeve. These sleeves can and will change over your lifetime. When you are younger, you may have a higher percentage of your investment assets in the 5+ year sleeve. As your near retirement, you will most likely increase the holdings in your cash and 2-5 year sleeve, and reduce the amount in your 5+ year sleeve.

The cash sleeve gives you the flexibility to have funds readily available if a market drop occurs, so you don't have to sell a position at a lower price and lock in a loss.

In retirement, the structure and number of sleeves will also depend on the amount of guaranteed income that you have from Social Security, pensions, and annuities. If your guaranteed income addresses all of your retirement needs, you can take on more risk, if you choose to, without impacting your retirement.

Active Management:

Our portfolio strategies are actively managed and our results bear out our philosophy. The biggest difference with our approach is that we don't use mutual funds in our portfolios, we use individual stocks and/or ETF's depending on the strategy, and when using ETF's we use sector ETFs.

We use this approach for several reasons:

  • If we needed to sell out of a position, we don't have to wait until the markets close as you would with a mutual fund.
  • We don't risk getting over-weighted in a particular company or sector, which could result from owning mutual funds.
  • We are able to keep our holdings to 25 to 30, which we believe let's focus on winners and to not own stocks that could reduce our returns.

Qualified Investment Accounts:

  • 401k
  • 403b
  • 457
  • TSP
  • IRA

Non Qualified Investment Accounts

  • Individual
  • Joint
  • Trust
  • Business

See why your neighbors have been talking to us.