Portfolio
Well done is better~ Benjamin Franklin
than well said.
SMARTER APPROACH.
WISER INVESTING.
PROVEN TEAM
PORTFOLIO OPTIMIZATION
LOW-COST ETFS
DIVERSIFIED ASSETS
Tradition combines the judgment of our experienced, proven investment team, Bloomberg-powered portfolio optimization, low-cost ETFs, index funds, and unique diversifying assets to build an efficient diversified portfolio for you. Our goal is to provide a superior risk-adjusted, net-of-fee, expected investment return for each client’s risk tolerance. Minimizing drawdowns and risk is, in our opinion, the best way to achieve expected long-term returns.
Read our white paper for a more detailed discussion of our investment methodology. The summary of our findings can be read in our current Global Strategy Update.
THE POWER OF WISER DIVERSIFICATION
A comparison of the Median Expected Capital Appreciation over 25 years of a Tradition portfolio to a typical domestic balanced portfolio of 60% stocks and 40% bonds. The two portfolios share the same level of expected risk and thus volatility drag.-
Initial Investment
$ UPDATE
- Tradition $ NET OF FEES
- Stocks & Bonds Only Portfolio $
- Potential Additional Value $
For the purposes of this illustration, we are modeling an Annual Expected Return for both portfolios over 25 years. For the Tradition portfolio, we are using the Long Term Expected Average Return of 7.06% (6.69% ECAR - Expected Compounded Annual Return), which is net of Tradition 1% management fee. For the Balanced Portfolio of 60% U.S. Stocks & 40% Bonds, the Long Term Expected Average Return is 5.74% (5.34% ECAR). Both portfolios have the same level of expected risk as measured by portfolio standard deviation. Volatility drag causes the Expected Compounded Annual Return over the 25 year period to be lower than the Long Term Expected Average Return. The management fees can be included or excluded for the Balanced Portfolio of U.S. Stocks & Bonds Only; the average annual management fee for a $500,000 account with a typical advisor is 1.05%*. All projected values of the Tradition portfolio are net of our 1% management fee. Median Expected Capital Appreciation is a probability analysis based on 10,000 Monte Carlo simulations for each portfolio. Median means 50% of the outcomes are better and 50% of the outcomes are worse.
Expected Return, Expected Risk, Median Expected Capital Appreciation, and Potential Additional Value are not forecasts but are only statistical definitions for modeling purposes. Investing involves risk and may lose money. See full disclaimer below.
* Source: AdvisoryHQ Study – Average Financial Advisor Fees 2016
- Stocks & Bonds
Only
THE POWER OF OUR PORTFOLIO
Portfolio Optimization
Research consistently has found that the best way to maximize returns across every level of risk is to combine asset classes rather than individual securities. Therefore, the first step in our portfolio construction methodology is to identify a broad set of diversified asset classes to serve as the building blocks for our portfolios. We analyze potential asset class’s long-term historical behavior across different economic scenarios and provide reasonable go-forward estimates for the various metrics for each asset class such as expected returns, expected risk, and correlations to other asset classes. With that information we can construct optimized portfolios for each level of risk.
Asset Classes
Investable assets are generally classified under four broad categories: cash, bonds, stocks and diversifying assets. Each category has different levels of return potential, protection from inflation, volatility, and correlation with each other. Typical portfolios that are not broadly diversified, such as those with mainly U.S. stocks and bonds, contain relatively high risk due to high correlation between the different stocks and bonds held within. The addition of less correlated assets can reduce total portfolio risk.
Global Diversification
It is natural to have a “home bias” when investing that can lead you to overweighting your investments in the areas and companies you are most familiar with – usually large-cap U.S. Stocks. While you may be most familiar with the S&P 500, it is actually merely a small fraction of the total global market capitalization. At Tradition, we make use of the wide range of global asset classes ranging from reinsurance to real estate to both domestic and international equities and many more, in order to create a diverse portfolio. In doing this we lessen the potential negative impact of market events.
Rebalancing
Rebalancing and ongoing monitoring of your portfolio is part of our management process. As market conditions change, our view of the opportunities and risks will evolve; this could result in changes in our Tactical Target Allocations. We will review for possible rebalancing at a minimum of every 6 months and more frequently if we deem appropriate due to significant market movements, the addition or removal of holdings, portfolio drift outside of acceptable ranges, or to address cash flows in or out of the portfolio.
Diversified Strategies
Tradition offers various portfolio options catered to your individual risk tolerance. Regardless of your chosen level of risk, expected returns are higher and expected risk is lower for each of our strategies versus a comparable stock-and-bond only portfolio.
- Tradition 90% Probability Range
- Tradition 50% Probability Range
- Tradition Median Range
- 100% U.S. Stocks Portfolio – Average Return
Assumptions:
$100,000 Initial Investment
1% Management Fee
Tradition offers various portfolio options catered to your individual risk tolerance. Regardless of your chosen level of risk, expected returns are higher and expected risk is lower for each of our strategies versus a comparable stock-and-bond only portfolio.
- Tradition 90% Probability Range
- Tradition 50% Probability Range
- Tradition Median Range
- 80/20% U.S. Stocks & Bonds – Average Return
Assumptions:
$100,000 Initial Investment
1% Management Fee
Tradition offers various portfolio options catered to your individual risk tolerance. Regardless of your chosen level of risk, expected returns are higher and expected risk is lower for each of our strategies versus a comparable stock-and-bond only portfolio.
- Tradition 90% Probability Range
- Tradition 50% Probability Range
- Tradition Median Range
- 65/35% U.S. Stocks & Bonds – Average Return
Assumptions:
$100,000 Initial Investment
1% Management Fee
Tradition offers various portfolio options catered to your individual risk tolerance. Regardless of your chosen level of risk, expected returns are higher and expected risk is lower for each of our strategies versus a comparable stock-and-bond only portfolio.
- Tradition 90% Probability Range
- Tradition 50% Probability Range
- Tradition Median Range
- 55/45% U.S. Stocks & Bonds – Average Return
Assumptions:
$100,000 Initial Investment
1% Management Fee
Tradition offers various portfolio options catered to your individual risk tolerance. Regardless of your chosen level of risk, expected returns are higher and expected risk is lower for each of our strategies versus a comparable stock-and-bond only portfolio.
- Tradition 90% Probability Range
- Tradition 50% Probability Range
- Tradition Median Range
- 45/55% U.S. Stocks & Bonds – Average Return
Assumptions:
$100,000 Initial Investment
1% Management Fee
Tradition offers various portfolio options catered to your individual risk tolerance. Regardless of your chosen level of risk, expected returns are higher and expected risk is lower for each of our strategies versus a comparable stock-and-bond only portfolio.
- Tradition 90% Probability Range
- Tradition 50% Probability Range
- Tradition Median Range
- 30/70% U.S. Stocks & Bonds – Average Return
Assumptions:
$100,000 Initial Investment
1% Management Fee