At Clarity, we utilize research from third party firms and work closely with their teams to help us construct portfolios taking into account current market and economic conditions as well as each of our client’s unique circumstances.
We utilize equities, fixed income securities, alternative assets, and cash to create diversified portfolios. We have the ability to invest in individual securities, exchange traded funds (ETFs), exchange traded notes (ETNs), and mutual funds. Since we are an institutional money manager, we have access to funds that are not available to retail investors. We screen and select securities based on certain standards including performance, suitability, cost, and tax efficiency.
Proper investment management is the means by which clients achieve their financial goals. We customize portfolios for clients, taking into account their current resources, previous investment experience, risk tolerance level, and time horizon.
At Clarity, we do not advocate short-term market timing or reliance on technical analysis. Instead, we create diversified portfolios as we feel it is essential to diversify across various asset types, classes, styles, sectors, and regions in order to manage the inherent risk in investing. Our asset allocation decisions assume a mid-to long-term investment horizon to give us confidence in underlying investment fundamentals, rather than short-term market sentiment. Given the ongoing changes in the global economic and political markets, this may lead to changes in our portfolio allocations in order to take advantage of opportunities that arise.
There are three primary steps to the asset allocation process for our model portfolios:
- Create a strategic allocation for each portfolio objective.
- Asset allocation shifts away from the strategic allocation when there are potential opportunities including:
- When one asset class is extremely undervalued relative to competing asset classes.
- When cyclical or other factors do not significantly detract from the valuation story.
- When long-term trends that we believe will have a major impact in defining the upcoming investment climate do not detract from the valuation story.
- When exposure to an asset class allows us to hedge against a potentially severe risk without giving up expected returns.
- Create a scenario analysis to stress-test the portfolio’s exposure to various downside risks.