Home > What We Do > Our Process > Investment Management Process

Investment Management Process

Step One: Determine an Appropriate Asset Allocation
Asset allocation, the ratio of equity investments to fixed income investments, is the single most important factor in determining the risk and return characteristics of a portfolio.
Making appropriate asset allocation decisions is based on an accurate assessment of the following client-specific considerations:
    • Individual risk tolerance/risk capacity
    • Progress towards financial goals
    • Time horizon
    • Portfolio objective
    • Investor preferences
    • Tax and other financial planning considerations

While no investor is the same, Beacon manages portfolios for three primary investment objectives:

Growth Portfolios
Objective: Capital Appreciation
Appropriate for those who have the ability to accept higher levels of portfolio volatility in order to attain a higher long-term rate of return.

All-Weather Portfolios
Objective: Total Return
Appropriate for those who are taking portfolio distributions or who prefer a low volatility investment approach.

Income Portfolios
Objective: Portfolio Income
Income portfolios can appeal to a wide variety of investors; from conservative investors who seek portfolio stability to growth-minded investors seeking investments with a high dividend yield.

Step Two: Investment Selection

Beacon’s investment strategy is implemented primarily through the use of mutual funds and exchange traded funds (ETFs). Mutual fund selection is based on both qualitative and quantitative factors including the following:

  • Investment objective and philosophy
  • Manager tenure
  • Buy and sell discipline
  • A well-defined investment process
  • Investment results in varying market conditions
  • Assets under management
  • Tax efficiency
  • Fund expenses
  • Risk and volatility considerations
  • Correlation with other portfolio holdings
  • Investment consistency
  • Rolling period statistics

Step Three: Monitor, Rebalance, Reassess and Adjust
Portfolio management is an ongoing and dynamic process. Listed below are four distinct components of Beacon’s ongoing portfolio management process.

Monitoring involves evaluating client specific, investment specific and market specific factors on an ongoing basis. Effective portfolio management requires proactive client communication, extensive awareness of portfolio investments and an ability to assess a changing economic and investment landscape.

Rebalancing is a key element in Beacon’s portfolio management process. As the financial markets ebb and flow, in order to maintain an investor’s risk/return profile it is necessary to reallocate among asset classes (stocks versus bonds). Academic studies have indicated that portfolio rebalancing is an effective way to control portfolio risk over time. 

Reassessment is the periodic process of evaluating the investment structure of a portfolio in the context of a client’s overall financial plan. Reassessing requires frequent meetings and an open line of communication between the client and advisor.

Adjustments are made to client portfolios for a variety of reasons. Fundamental changes within a mutual fund (investment philosophy changes, manager changes, etc.) may result in reduced exposure or even elimination of a fund. Identifying funds with a more favorable outlook may cause us to swap one fund for another. Investment changes are also made due to client specific factors such as a change in risk tolerance or a life change (like deciding to retire).
 
Welcome Message
Get the Flash Player to see this player.
Request More Info
Click the link below for more info. Or feel free to give us a call.
Request More Info
News and Press
logo
Home | Blog and Articles | About Us | What We Do | Videos | Newsletters | News and Press | Financial Links | Contact Us

Copyright @ 2010, Beacon Financial Strategies, All Right Reserved.