A Clear Difference
We create portfolios with a dynamic blend of strategic asset allocation and tactical management that moves past the simplistic core / satellite structure. By overlaying these two distinct approaches, we maximize the strengths and limit the weaknesses of each. The result is a highly effective method of investing in today's complex markets.
Our Core Beliefs
Our philosophy is rooted in three key principles:
- Using Modern Portfolio Theory to construct allocation models provides important benefits when it comes to portfolio diversification and overall efficiency.
- The ability to adjust a portfolio's allocation to reflect changing expectations is critical in today's investment climate.
- A portfolio with a mathematically based approach that can achieve both of the above serves investors best.
Beyond the Status Quo
We understand why yesterday's strategies aren't powerful enough for today's financial markets, which have seen fundamental shifts during the last few decades.
- While Modern Portfolio Theory (MPT) was not intended to leave investors with a static Asset Allocation, the industry has chosen to implement MPT as a relatively stagnant portfolio for efficiency and suitability purposes.
- Tactical investing relies too much on manager "calls" as well as an increased risk from concentration in a small number of classes.
- Core / Satellite, which simply uses some of both strategies, can create problems with operational efficiency, controlling class exposure, and in quantifying the true risk and benefit to the investor.
Increased correlation in down markets has shown that the diversification benefits of a buy and hold strategy are not effective in every market environment. Some tactical strategies worked well when markets were down but tend to underperform over long up cycles and have additional issues when it comes to risk management. While different investment management styles have proven successful during various market cycles, we believe that the shortcomings of each strategy used in isolation are too great to ignore. We also believe that styles need to be blended together in one portfolio, so they work in harmony.
The Best of Both
Premise Capital® has the answer for investors and advisors who want a better way. It's based on the premise that a portfolio can combine the strengths of modern portfolio theory and tactically managed models, while reducing their weaknesses. The result is a fully-diversified Frontier Advantage™ Portfolio that reacts to the current environment while maintaining a position on the efficient frontier.
300 East 5th Avenue, Suite 265
Naperville, IL 60563