Flexible Strategic Allocation Portfolios
Investment success comes from consistently following a strategy
that matches your individual needs for growth and income, while balancing your
tolerance for risk. Hamilton-Bates Investment Portfolios employ one of two
general methodologies; Strategic Asset Allocation or Tactical Asset Allocation,
each with its own set of characteristics and appropriate depending upon an
investors objectives and risk profile.
The Strategic Asset Allocation Program employs the Modern Portfolio Theory of asset allocation and
diversification, put forward by investment allocation pioneers Sharpe and
Markowitz. The Strategic Allocation Portfolios employ a diversified approach to
investing, holding a mix of stocks, bonds and cash equivalents, optimized based
on their historical relationships. Strategic Allocation minimizes trading and
keeps client portfolios fully invested. These portfolios are closely monitored,
and rebalanced quarterly in order to ensure an optimum balance of assets and
Modern Portfolio Theory is based on asset diversification. It is designed for investors who desire a strategy that remains largely invested with measurable asset diversification with some flexibility. The theory is based on the concept that a portfolio can be optimally invested by utilizing a variety of asset classes. This is accomplished by analyzing historical relationships between asset classes. If two asset classes historically move together in price, they are said to have positive correlation. If two asset classes tend to move in opposite directions, they are said to have negative correlation. By combining asset classes that have low or negative correlation, a more efficient portfolio is created than a portfolio consisting of just a single asset class, most commonly stocks. Modern Portfolio Theory endeavors to generate the maximum possible expected return for a given level of acceptable risk.
All major asset classes are analyzed in the Strategic Asset Allocation Program and divided
into specific categories. These asset classes differ in their expected returns
and levels of risk. In this way, by combining assets that complement each other,
some assets will increase in value even as others fall, therefore, mitigating
portfolio losses and volatility. The result can be a portfolio that has a low
level of risk relative to its expected return.
The Strategic Asset Allocation Strategy employs a risk reduction strategy through investment
diversification. There are three portfolio options in the Strategic
Allocation Strategy, based on investment objective and risk tolerance. Typical
asset class breakdowns are shown. Investment positions can and will vary based
on economic conditions.
Asset Class Ranges and guideline weightings
(The Stocks category includes international as well as domestic equities, while
Bonds includes cash equivalents).
The Strategic Allocation Program identifies asset classes
to specific benchmarks to provide diversification and reduce overlap. Using
these benchmarks the varying asset classes are analyzed and the portfolios are
created. The available mutual fund universe undergoes an investment style
analysis to insure that it reflects the appropriate benchmark. Once the mutual
funds are selected, the optimized portfolio is complete. The portfolios are
reviewed, re-optimized and re-balanced on a regular basis. The mutual funds
within the portfolios are regularly reviewed to insure investment style
consistency and adjustments are made if necessary. In addition to their regular
statement they receive directly from the funds, clients receive a Quarterly HBIR
Account Statement along with a newsletter detailing the current financial market
The Strategic Asset Allocation Program is appropriate for
virtually all long-term investors. Their diversification makes them well suited
to represent the foundation of an investor's holdings.