Multi-Asset Class Portfolios

Blindly following the larger university endowment model for diversification can lead to unintended consequences. Our approach rests on transparency, liquidity, and reasonable cost while recognizing that portfolios must be diversified across economic regimes.

Building a portfolio of diversified investment (asset) classes is the key to achieving long-term goals.

But we believe many advisors do not properly understand the pro's and con's of multi-asset class diversification. Blindly following the endowment model popularized by larger universities or foundations can lead to increased cost, diminished returns, and unintended consequences.

See our feature article "The Irresistable Melody of the Pied Piper" for our full analysis of the endowment model. To summarize our view: we believe that asset allocation strategies for most investors--to properly weather economic uncertainties over an investment cycle--must 1) reflect the principles of transparency, liquidity, and reasonable cost and 2) recognize that asset classes can behave very differently depending on the underlying economic regime.

Our Asset Allocation Framework consists of four key steps, as shown below.

Asset Allocation Framework

A key element is understanding how different asset classes perform in various economic environments and matching that knowledge to the time horizon needed to achieve a client's goals.

 Portfolio Construction

We take time to understand each client’s risk profile and near term and long term intentions, to create a customized allocation strategy that is therefore diversified across various economic cycles with consideration to the client’s tolerance for risk, volatility and liquidity. Our goal is to maximize the expected return for the level of acceptable risk.

We construct our portfolios with investments that are simple and transparent, easy to rebalance and avoid imbedded fees. Volatility cannot be completely diversified, but it can be matched to an investor’s proper risk profile and goals.

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Featured Topics

The market crash exposed weakness in the long-heralded “Endowment Model.”What did
we learn about it? And how do we think about structuring portfolios for uncertain times?

Fundametrics® Research Process

Financial pie chartThe Fundametrics® research process is our proprietary computer-based research system, which screens our universe of stocks and decile ranks them according to specific valuation criteria.

Read more about Fundametrics® >