From the desk of Willie Delwiche.
A DYNAMIC APPROACH TO PORTFOLIO MANAGEMENT
The number one question I have gotten from financial advisors over the course of two-plus decades in this business is “What should I do now?” The answer can sometimes be “nothing”, but it cannot always be “nothing”. Dynamic portfolio management is about finding the right balance between following existing trends and adjusting as necessary to new information. To do this we need to have a good grasp of time frames. Every investor has a timeframe. Every system has a timeframe. Finding harmony between the two helps provide the appropriate balance between action and inaction.
We can think about this in terms of navigation and one of my favorite investing metaphors: sailing. We wouldn’t want to go on a journey with a captain who fiddles with the rigging so much that he cannot hold the wind. We also wouldn’t want to go sailing with one who doesn’t even try to catch the wind in the first place. We want to go sailing with a captain who observes where the wind is actually blowing and positions the boat accordingly. Even once the wind fills the sails and there is a steady hand on the tiller, small adjustments help keep the sails trim and the heading true.
WE ARE INTRODUCING 4 DYNAMIC PORTFOLIOS
- ASC+Plus Strategic Allocation Portfolio has a longer-term timeframe and is built around core strategic asset class holdings tilted to reflect secular risk/reward dynamics.
- ASC+Plus Cyclical Allocation Portfolio provides cyclical exposure built on our weight of the evidence approach and consistent with the relative price and momentum trends we see within and across asset classes.
- ASC+Plus Tactical Opportunity Portfolio is a “go anywhere” approach to managing risk and pursuing opportunity over a shorter time horizon.
- ASC+Plus Yield Portfolio is designed to provide dynamic yield generation within a challenging secular rate environment.
In addition to providing clarity about “what to do now” based on time frames from long-term to short-term (strategic → cyclical → tactical), these portfolios also strive to maintain a healthy balance between the market risk environment and investor risk tolerances. Contrary to what some may believe, neither of these risk factors is static. Bad things happen when portfolio risk is out of line with either of these risk factors. Once timeframes have been established, successful portfolio management relies on risk management more than anything else.
