Investors always want to know how we manage our client's money.
During the "Search for an Advisor Period"....when a potential client is meeting with us for the first time and often interviewing other advisors as well, this question always comes up.
Good question... and a fair question!
Well, we employ an "active" vs. a passive buy and hold money mangement strategy. We actively seek to minimize drawdowns in client accounts by reducing risk and raising cash when appropriate, or taking profits and finding new opportunities, or maybe just sitting on the sidelines for a little while with a good amount of cash to redeploy when a new opportunity arises or volatility settles down. We will also apply "hedging positions" to freeze accounts or minimize the downside.
WHAT WE USE IN PORTFOLIOS
We use ETF's and stocks in our portfolios. An ETF (Exchange Traded Fund) is essentially a basket of stocks that are segregated in some form based on the sectors stocks operate in; if they are large cap stocks, small cap stocks, growth stocks, low volatility stocks, etc. ETF's catagorize stocks into groups. For example, there is a financial ETF that contains banks and payment services. There is a Semiconductor ETF containing only stocks that are associated with building and selling semiconductor chips. There are ETF's that are just Large Cap Growth stocks or Mid Cap stocks only, and even country specific ETF's. So, there are nearly 3,000 ETF's out there in all these different forms.
We also use stocks in our portfolios. We like to have a solid base of good well known Blue Chip stocks as core stock positions. Some examples would include stocks like Apple, Microsoft, AT&T, Verizon, WalMart, ExxonMobil, Disney, or JP Morgan Chase to name a few. Then on top of those we like to add some more speculative stocks that are smaller companies, or not so well known but have great potential price appreciation. These more speculative type stocks are not long term holds and will get switched in and out much more often because they can have much greater and faster price fluctuations.
HOW WE ALLOCATE ETF's & STOCKS
Our process for selecting ETF's and stocks is proprietary so we're not giving out the exact details on that but will explain some of the process here.
For the ETF portion we want to have a core base of the S&P-500 and typically the Nasdaq 100 or some form of the Nasdaq. These two positions will typically contain between 40%-60% of the portfolio. Then we look for sector ETF's that will consist of roughly 20%-30% of the portfolio. Finally, we will have the core Blue Chip stocks making up approximately 10%-15%, and the remaining 5%-10% will be lesser know more speculative stocks that get rotated more frequently.
TYPICAL AGGRESSIVE PORTFOLIO
SYMBOL NAME AAPL
APPLE INC COM USD0.00001
BAIDU INC SPON ADS EACH REP 0.1 ORD SHS
CHUBB LIMITED COM NPV ISIN #CH0044328745
CHURCH &DWIGHT COM USD1.00
COLGATE-PALMOLIVE CO COM USD1.00
COMCAST CORP NEW CL A
DISNEY WALT CO
DOW INC COM
INNOVATOR ETFS TR IBD 50 ETF
GREENBRIER COMPANIES INC
GENERAL MILLS INC COM USD0.10
HERSHEY COMPANY COM USD1.00
INTERNATIONAL BUS MACH CORP COM USD0.20
ETF MANAGERS TR PRIME MOBILE PAY
INVESCO LTD SHS
COCA COLA CO
MONDELEZ INTL INC COM NPV
INVESCO EXCHANGE TRADED FD TR DYNMC SOFTWARE
QORVO INC COM
RINGCENTRAL INC-CLASS A
STATE STR CORP COM
SKYWORKS SOLUTIONS INC COM
AT&T INC COM USD1
INVESCO EXCHNG TRADED FD TR II SOLAR ETF
TARGET CORP COM
TRAVELERS COMPANIES INC COM STK NPV
WENDYS COMPANY COM USD0.10
WASTE MANAGEMENT INC
WALMART INC COM
SPDR SERIES TRUST S&P AEROSPACE &DEFENSE ETF USD
SELECT SECTOR SPDR TR SHS BEN INT MATERIALS
SELECT SECTOR SPDR TRUST AMEX FINANCIAL SELECT INDEX USD DIS
EXXON MOBIL CORP
SPDR SER TR S&P RETAIL ETF
APPLE HOSPITALITY REIT INC COM NEW
BRIXMOR PPTY GROUP INC COM
EPR PROPERTIES SBI USD0.01
KIMCO REALTY CORP COM USD0.01
LTC PPTYS INC
OMEGA HEALTHCARE INVS INC
HEALTHPEAK PPTYS INC COM
WEINGARTEN RLTY INVS SH BEN INT