At Vantage we believe investment portfolio management, like any other strategic process, is constantly evolving. Our investment philosophy includes three key aspects; Research, Planning and Management.
Before beginning the planning phase for the portfolio, we conduct extensive analysis on the risk and return characteristics of the investment vehicles to be incorporated into the portfolios. Our research includes examination of performance in comparison with the appropriate benchmark as well as a study of the market, credit, interest rate and leverage risks of the individual positions. Having a clear understanding of the underlying risks taken to achieve the returns on these investment vehicles offers insight into the potential for future performance.
The planning phase formulates appropriate strategic asset allocation parameters which match well with our client's objectives and constraints. These factors are combined with long-term market expectations within the portfolio design. In addition, the portfolio is matched to the client's appropriate risk tolerance level.
Before a portfolio is implemented, adjustments may be made due to new economic or market developments. Our portfolios incorporate both the strategic asset allocation for long term perspective and the tactical approach for a shorter term view; generally 0-2 years. We believe the markets are subject to a herd psychology that can over or under-inflate investment areas and asset classes. Using tactical shifts we can underweight or overweight asset classes relative to their target weights in the portfolio to take advantage of shorter term opportunities. Once implemented, the portfolio is reviewed for tactical changes and re-balancing as needed.
There are two components of a typical Vantage Managed Investment Portfolio; core investments and alternative investments. Each part contributes to the performance and volatility of a client's portfolio.
The Core allocation in each client's portfolio typically consists of passive and/or actively managed long-only exposure to traditional equity and fixed income markets. A passive exposure is gained through Exchange Traded Funds which allows use of a covered call strategy. This strategy incorporates the writing (selling) of call options on the positions for the potential of added income within the portfolio.
Sophisticated investment asset types and strategies that have been offered to large institutional clients are becoming more readily available for use in individual portfolios. Many of these investment vehicles have historically provided low or non-correlated returns to a long-only strategy of stock and bond investments. When appropriate these are incorporated into the portfolios.