Because we work primarily on the Charles Schwab Institutional platform, we can offer a wide array of exchange-traded funds (ETF’s), mutual funds, no load funds, load funds (purchased at Net Asset Value) or no-load funds that may have a transaction fee attached. We have two primary models, a small account model (for accounts under $40,000) and dynamic asset allocation models that employ a variety of asset classes, investment styles and weights. ETF’s are passive investments that mimic a certain index. The advantage to ETF’s is that they trade like a stock yet give you the diversification of a mutual fund. They are also very inexpensive.
We analyze all ETF’s and mutual funds for performance over a five-year period, using those that have a good long-term track record compared to their peers and exhibit a consistency to their returns. Because we use top rated risk/reward funds in portfolios, the total risk of the portfolios are generally less than the risk of the general market as measured by the S&P 500. We regularly make a determination concerning how much equity exposure and which funds to hold in portfolios based on general market conditions and outlook and will make adjustments as warranted.
Maximum Capital Growth – This portfolio’s objective is to provide long-term capital appreciation and generally includes only equity mutual funds or ETF’s in the portfolio. Although this is the highest risk portfolio, the risk is generally less than the S&P 500 (which is its benchmark) as measured by portfolio standard deviation. The equity portion of these accounts is targeted to be between 80% and 100% of the total portfolio.
Growth & Income – This portfolio’s objective is to achieve long-term appreciation over a time horizon of five years or more. Generally, this portfolio holds the same equity funds as the Maximum Capital Growth portfolio, but includes some fixed income and bond funds to reduce risk. The equity portion of these accounts is targeted to be between 60% and 80% of the total portfolio.
Balanced Growth – This portfolio’s goal is to achieve significant capital appreciation over the longer time horizon of ten years or more. Generally, this portfolio holds the same equity funds as the Maximum Capital Growth Portfolio, but also includes some fixed income and bond funds as well to reduce risk and achieve some current income. The equity portion of these accounts is targeted to be between 40% and 60% of the total portfolio.
Equity Income – This portfolio’s goal is to achieve modest growth of capital, but income is the main consideration. When equity funds are held, they are typically blended funds, instead of style specific as held in the portfolios above. The equity portion of these accounts is targeted to be between 20% and 40% of the total portfolio.
Income – This portfolio’s goal is the lowest degree of risk and the highest current income. It generally has the largest bond or fixed income fund holdings but equity fund exposure may still constitute up to 20% of holdings. When equity funds are held, they are typically blended funds, instead of style specific as held in the portfolios above.
Generally, Model Portfolios may have zero loads from the following asset class or investment style groups: large/mid/small cap growth, value, gold or natural resources, inverse or short, international, and fixed income or bond funds.
