Unleashing Asset Allocation Benefits

In our latest installment of From the Desk of the CIO, we explore the benefits of asset allocation that a mindfully-constructed ETF portfolio can provide. CIO Mike Parker explains how the tools that larger institutions have long deployed can be achieved by the individual investor. This piece acts as a companion to a broad allocation change that we have made to our Multi-Asset Income (MAI) strategy, effective as of March 1st for existing clients. You can access the whitepaper in its entirety by clicking here. Here is an excerpt:

ETFs have revolutionized the ability for the main street investor to achieve benefits previously confined within the walls of large institutions. However, an ETF portfolio constructed without careful attention paid to the profile of issuers comprising it, or the numerous factors impacting its overall quality, can dramatically blunt the efficacy of their deployment. The whole premise of selecting ETFs is rooted in the benefits of asset allocation that they offer, yet certain selection pitfalls can occur when sifting through the hundreds of available offerings. Before delving into how we specifically attempt to navigate this for the benefit of our clients, let’s first explore the merits of institutional asset allocation.

Asset Allocation

Institutional asset managers have long leveraged asset allocation as a powerful tool for return variability management, i.e. attempting to mitigate performance impacts from anything but price movements of their underlying indices. Asset allocation also can have a greater impact on the variability of your overall return than any individual security within your portfolio. For long term investors, the key is to have a sound, clear execution plan in harnessing all of the rewards that a prudent asset allocation strategy can deliver. Our diversified ETF-based strategies have been designed to achieve precisely that, bringing the tools traditionally deployed within a large institution to the individual investor.

The first step to asset allocation design is categorizing the opportunity set of an investable universe.  The core variable here is the universal feature behind every security. . . 

Download the rest of the whitepaper by clicking here