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What is the philosophy behind this portfolio?

We believe that a strategic asset allocation model that is regularly rebalanced and geared for capital growth with supplemental investment income, providing a meaningful component to total return, will provide a client solid, long-term risk-adjusted returns. In this case, our aim is for the aggregate portfolio risk to efficiently align with a client’s conservative growth investment objective. We prioritize high-quality security selection, and expect that design to contribute to delivering consistent returns for wealth accumulation at a rate beyond inflation, taxation and fees.

What types of clients use this portfolio?

This ‘Conservative Growth’ model is typically deployed in $500,000+ IRAs for clients within a 10- to 15-year window on either side of retirement and a fully vetted conservative growth investment objective.

How is this portfolio built to weather a downturn like the present moment?

 To mitigate the consequences of an extremely negative economic outcome, we are holding more cash than usual. That 4% cash position serves as a form of temporary portfolio insurance in the event investment income does diminish, as well as a source of funds to recalibrate the portfolio allocation as needed once the Covid-19 crisis peaks and we are able to reasonably assess portfolio impairment.

That said, we feel the portfolio is built for all-weather environments given its focus on quality and total return, as investment income provides a portfolio yield of approximately 2.25%, as of early April. 

In terms of other recent changes, we significantly reduced small-cap, energy and financial stock exposure in late December 2019 and late February. As a result, we feel the equity component is positioned on higher ground. 

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