Our construction process begins with collecting pertinent client information, including a capital needs analysis and risk tolerance profile. Once a client’s information has been obtained, an initial portfolio can be created and rebalanced periodically.
Each portfolio is constructed on an individualized basis, but many portfolios have a common format. The majority of assets are invested in a well-diversified core of actively and passively managed investments. When selecting these investments, our goal is to find actively managed investments that have a historic track record of performance above their benchmarks whereas the goal for passively managed investments is to gain an exposure to a specific asset class or investment style at a relatively low expense ratio. Clients, who have not already done so, are encouraged to make an appointment to discuss the nature of the investment strategies mentioned above in more detail. Of course, past performance does not guarantee future returns and principal is at risk. Prospective clients are encouraged to contact our office for more information.
The portfolio construction prescription used by the Legacy Foundation LLC, calls for a core-satellite approach. Our core is less frequently adjusted because it is designed with a longer investment horizon in mind. Satellite portfolios may be adjusted on a more frequent basis. A satellite portfolio is small portion of the overall portfolio, devoted to a particular investment strategy. The first satellite is event driven and provides a flexibility that enables responsiveness to changes in fiscal and monetary policy, both domestically and abroad, as well as other identifiable trends. The second satellite is driven by a computer algorithm. Note that no investment strategy can protect against a loss of principal or guarantee a specific rate of return. Clients, who have not already done so, are encouraged to make an appointment to discuss the nature of the investment strategies mentioned above in more detail. Prospective clients are encouraged to contact our office for more information.
Modern Portfolio Theory posits increasing expected long-term gains with an increasing perceived risk to principal. As such, a client’s risk objective can be translated into an equity, alternative, and fixed-Income asset allocation. Alternatives, as used in our portfolios, are limited to commodity and real estate investments. Note that expected return will differ from actual return and perceived risk will differ from actual risk. Note that no equity, alternative, or fixed-income investment, or overall portfolio allocation, can prevent the loss of principle or guarantee a rate of return. Clients interested in more information are encouraged to contact our office.
Daniel J. Sandberg, Ph.D. and Alexander T. Radcliffe, Senior Research Analysts
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