I frequently get questions regarding my investment strategy when connecting with new clients and prospective clients. Here is a summary of my investment strategy and approach:
- I use Nobel prize winning modern economic portfolio theory to help construct portfolios with the goal of improving long-term returns given a specified level of risk. The level of risk taken on is determined by the client, their goals, and the time frame of use on the money.
- I use a bucketing strategy to allocate assets using short-term (1–3-year time frame), mid-term (3–7-year time frame), and long-term buckets (8+ years). Buckets are invested based on the time frame of use on the assets. Risk is determined based on when the assets will be used along with client risk tolerance.
- I focus primarily on tax-efficient investing strategies and believe tax alpha matters a lot. Almost every transaction has a tax consequence. Therefore, portfolios are created, developed, and modified with tax efficiency at the forefront. Examples here are utilization of municipal bonds and exchange traded funds in taxable accounts, real estate and bonds in tax deferred accounts, and growth assets in tax-free accounts.
- I believe that diversification can improve long-term returns without taking on additional risk. I believe diversification is the key to managing volatility in a portfolio.
- I take a long-term approach to investing. I do not make decisions based on recency bias of best performing asset classes in recent history.
- I recommend rebalancing to make changes. As the markets, economy, and portfolio allocations change, I make recommendations based on those factors.
- I believe that markets are mostly efficient. I believe that using cost-effective passive investments is sufficient to achieve desired risk and return for most asset classes. An example here is large sized U.S. stocks such as the S&P 500.
- On the other hand, I believe there are a few areas of the markets that are inefficient, specifically areas where information is less available. Examples here are small cap stocks, international stocks, and emerging market bonds. For these asset classes, I believe active management and stock picking can lead to greater returns in favor of the client.
- I believe alternative investments such as private markets and commodities can be a useful addition to portfolios.
- Because I am affiliated with Ameriprise, I have access to Ameriprise resources. Ameriprise provides us with an investment research team to provide us up to date information regarding specific investment vehicles, trends, and economic information, along with due diligence on all investment firms and products we work with.
In summary, I use the resources available to me and apply portfolio management principles to develop, modify, and service client portfolios to help efficiently align their investment plan with their financial goals.
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