ABSOLUTE
Investor Profile
An investor in the absolute strategy would like to capture a significant portion of the upside provided by equity markets but is willing to sacrifice some of the upside to protect against downside moves in the equity markets. This is an investor who does not require much current income, does not need or desire a portfolio of only fixed income and has the wherewithal or need to invest in the equity markets. However, this investor does not have a high tolerance for equity market volatility and prefers to give up some return to experience less volatility.
Strategy Objective
The objective of the strategy is to obtain a return close to the equity markets over time but with less volatility. The benchmarks used for this strategy are a 60/40 balanced portfolio benchmark and US 3 month Libor plus 500 basis points.
Strategy Characteristics
Several different fund manager styles will be used in this strategy. We invest in funds that are flexible stock picking focused funds that can and will keep a meaningful percentage of the fund assets in cash or fixed income if the managers sees fit. We invest in global allocation funds with broad flexibility to invest in whatever regions or asset classes provide the best risk adjusted return expectations. We invest in funds that more closely resemble a traditional domestic focused 60/40 balanced fund. In addition, we retain flexibility to invest in more focused differentiated funds such as managed futures, long short, hedge fund tracking, managed volatility, etc. if we believe the strategy can benefit from such a fund.
Strategy Process
We screen for managers that have a very broad flexible mandate when allocating cash. These managers are investing with an absolute return mindset vs. managers who are investing to beat a benchmark. Managers are inherently more tactical in this model and we are looking for managers that are not afraid to make meaningful shifts in the portfolio. We monitor the performance and approach of managers within the portfolio and those on a short list that we hold in high regard.
The weightings between managers are tactical asset allocations decisions. Our own research and third party data helps us to make these decisions. This strategy is inherently more tactical than others because we and the underlying managers employ elements of tactical asset allocation.
The weightings between managers are tactical asset allocations decisions. Our own research and third party data helps us to make these decisions. This strategy is inherently more tactical than others because we and the underlying managers employ elements of tactical asset allocation.
Learn more about Active Fund Strategies.
*The investment(s) discussed may not be suitable for all investors. Investors should make investment decisions based on their own specific investment objectives and financial circumstances.
**Additional information is available upon request.
***Any investment contains risk, including the risk of total loss, fluctuating prices and uncertain returns.
**Additional information is available upon request.
***Any investment contains risk, including the risk of total loss, fluctuating prices and uncertain returns.