At CMG we believe investment advice should not be delivered in a vacuum; we believe it is an integral part of an overall Financial Plan. Once we work with our client to establish goals, we can then determine the role that their investments will serve in achieving the Financial Plan’s objective. Only at this point can we begin the process of constructing a suitable investment portfolio.
- Strategic Allocation
We begin with an assessment of the client’s risk posture and long term investment objective and then overlay that with a 5-year, forward looking Strategic Asset Allocation.
- Tactical Tilts
Tactical tilts are slight over and underweight positions that we will apply to a strategic model based on our view of shorter term economic and market trends. On a monthly basis we will evaluate tactical tilts to the portfolio through our Investment Committee Process. The goal in applying these tilts is to attempt to capitalize on short-term opportunities without disrupting the long-term strategic model.
Through a comprehensive research process we will implement the investment strategy by using multiple investment vehicles, such as institutional money management, open-end mutual funds as well as Exchange Traded Funds that adhere to our investment criteria. We do not have an overarching general view on whether active or passive management is more effective – we simply base our decisions on result-oriented measures. In other words where actively managed funds have historically tended to outperform their respective index net of fees, they will be considered. However, if it proves difficult to find such management expertise in a certain asset class we will use passive investment strategies through indexing.
In addition to having traditional, risk-based strategic models with tactical tilts, we will also apply a specific objective to the risk-based model where desired. For example, a client may require an income-biased portfolio. In this case, we would use traditional investment criteria to select investments and then overlay that with a set criterion in search of investments with higher distributable income.
- Tax Efficiency
Often investors look at their gross rate of return without regard to the tax consequences of their investment strategy. We believe that what you keep is more important than what you earn. As such our taxable accounts are monitored with an eye on tax efficiency. Our strategy includes not only selecting investments with a track record of tax efficient returns but also monitoring capital gain distributions in advance so we can advise clients on the best approach to achieve tax efficiency. In addition, our fixed income portion is selected and monitored not only based on the client’s tax bracket, but also the state and city of residence. A team approach with our client’s tax advisors enhances our ability to manage their portfolios in a tax efficient manner.