Be Efficient
The Efficient Market Theory says that it is nearly impossible to capture returns in excess of a market return without taking greater than market levels of risk. The only issue of concern is the relationship between risk, return, time, and correlation.
For these reasons, we help each client to measure their capacity for investment risk, using our comprehensive risk tolerance questionnaire. We can then begin to construct a portfolio that is most suited to their risk capacity and objectives. Using a program which has data on asset classes extending back to 1926, we build a portfolio with known risk and return characteristics. We then back-test this to show what would have occurred had they owned those funds during times of market downturns, to ensure that they fully understand the risk of owning that specific portfolio.
Once the portfolio is established, the asset classes within it will not move in tandem and the amount of money in each category will change as markets fluctuate. To keep things on track we rebalance the holdings back to par when certain agreed tolerances are exceeded. Each portfolio is analysed quarterly to determine whether rebalancing is necessary - maintaining the chosen level of risk, and taking advantage of price changes by automatically buying low and selling high.