Broker Check

Portfolio Construction Process

By focusing on individual security selection instead of how individual securities work together, your portfolio can be exposed to unintended risks. Our portfolio models are through our broker dealer, LPL Financial, and allow for a holistic approach to investing, which can improve the possibility for better investment outcomes.

I. Benchmark

  • Align client’s objectives and risk tolerance to the risk and return characteristics of the portfolio.
  • The North Star that can help clients establish an initial risk level, determine asset allocation drift, and quantify performance attribution.
  • Provide a clearly understood reference for how a portfolio performs over time.

II. Budget

  • Risk Budget:

    • Identify what kinds of risks present the best opportunities for return
    • Align risk parameters with client’s objectives and risk tolerance.
  • Cost Budget:

    • Minimize the cost of fees and taxes to maximize the value of the portfolio.
    • Index – low cost, diversified market exposure. No excess returns over the benchmark.
    • Alpha-seeking (Active)– seek to generate excess index returns by actively managing the underlying securities.

III. Invest

  • Determine the most appropriate investments to implement the strategy.
  • Evaluate various investments, such as active mutual funds and ETF’s for efficiencies.
  • Each investment chosen enhances the portfolio’s return against the benchmark.

IV. Monitor

  • Measure and rebalance with discipline.
  • Tracking versus the portfolios benchmark helps objectively assess how much return and risk is being provided by the markets at any given moment.
  • Apply timely and tactical adjustments

Your portfolio will be built by using these four cornerstones and applying your individual objectives within them. Portfolios operate within the framework of SWA philosophies and processes. They are not alike, but rhyme. Your portfolio won’t be identical to every other portfolio; however, it will follow the same process which ensures consistency.