Choosing the best investments for your portfolio can be a complicated process. There are close to 8,700 stocks and over 10,000 mutual funds available to investors. This does not include other investments such as annuities, ETFs and alternatives. It is no wonder many individuals are confused as to where they should invest their assets. Through our screening process and expertise, we are able to separate the remarkable managers from the ordinary. Understanding and incorporating this ideology into your investment strategy may produce more favorable outcomes.
In todays’ investment environment, investors can either choose a passive or active investment strategy. A passive strategy is when an investor looks to maximize return through minimal management. This is usually accomplished through index funds or target date funds.
At GFA, we take a more hands on approach. We believe active management can often outperform passive investing. Through active management, we select class leading managers for every asset style in our clients’ accounts. These managers have shown they can outperform the indices, benchmarks and their peers. The ultimate benefit to our clients’ is higher returns, along with the possibility of lower risk.
It is important for our clients to know how we define investment management. Normally a manager is an individual or team that manages a portfolio of stocks or bonds in a mutual fund. We select each manager based on their expertise in a specific asset category.
At GFA, our disciplined analysis of the investment universe allows us to identify category leading managers in both equity and fixed income, as well as other alternative assets.
We select managers after evaluating criteria such as:
This is only a short list of our criteria. Also, continuous monitoring of the manager is just as important as initial selection, which assures consistent outcomes.
Too often investors have little if any idea of the risk they are taking when they invest. When we ask prospective clients their risk tolerance, they usually say something about wanting to take “moderate” risk. I am sure you may feel the same way. But really, what does that mean?
Investing requires discipline. Constructing a proper investment portfolio begins with identifying your risk tolerance. We have a straight forward, analytic method to define the amount of risk for your investments. Without risk parameters, your portfolio may experience excessive and unwanted volatility.
This is why, at GFA, we require all clients to complete a risk tolerance questionnaire. Along with our many years of experience, we then can build a proper portfolio for your assets.
Even the best constructed portfolio can experience severe volatility and be exposed to downturns. This is why we employ a broader, macro view towards investing. By analyzing market and economic fundamentals, we can maintain balance in clients’ portfolios.
This allows managers to do what they do best: select individual investments and monitor those selections. This allows us to structure assets allocations which will be optimally suited to economic conditions.
We can increase stock exposure when markets may do better and likewise reduce equities when we believe markets will decline. This does not mean we are timing the markets. Not only does market timing not work, but it is not a viable investment strategy. Instead, we are vigilantly monitoring economic data and adjusting our allocations to maximize returns.