- Investment Management
Asset allocation is the primary foundation of our investment philosophy. A number of modern investment studies have proven that the selection of a portfolio’s asset allocation can be responsible for over 90% of a portfolio’s performance with the remaining portion being comprised of market timing, security selection, and other factors. (source: Brinson, Hood and Beebower published June 1991)
The primary purpose of asset allocation is to reduce the real risk or standard deviation (unexpected price decline), while maintaining an investor’s desired long-term rate of return expectations through all the different market cycles and through different economic and political events. A sensible, proven asset allocation strategy, based upon an optimal mix of asset classes interacting with each other, has the potential to outperform its parts while minimizing overall risks.
The portfolios we manage consist of equities, fixed income, cash/cash equivalents, and alternatives across different sized companies (large cap and small cap), different investment styles (value and growth), different geographic locations (U.S., foreign developed, emerging, and frontier markets) and different economic sectors (technology, healthcare, consumer staples, etc.).
Colorado Financial Service Corporation uses a variety of methods to determine its securities selection for its portfolio models. We utilize academic research, journals, subscription services, Morningstar, brokerage research channels, and attend national investment conferences specifically looking for new investment opportunities.
Our core methods are directly driven by: fundamental, technical and macroeconomic analyses. Business valuations, earnings reports, balance sheets and analyst opinions are published daily inside Morningstar research. Technical indicators, trends, historical stock charts are examined to help determine points at which to buy and sell investment positions. The Organization for Economic Cooperation and Development (in Paris) collects 217 leading economic indicators, from 34 different countries, publishing a number of reports, utilizing real surveys and statistics, reporting global economic trends in help determining which areas of the world have favorable economic conditions and those that do not.
Investment Selection & Fee Prudence:
We are very mindful of costs and therefore generally use no transaction fee (NTF) mutual funds, highly emphasize low expense ratios, and exchange-traded funds (ETFs).
We research and analyze products, objectives and strategies prudently choosing between active and passive investment strategies. For instance we believe that active management generally under-performs the U.S. small-cap value index while generally it outperforms the U.S. small-cap growth index.
Asset Location & Tax-Efficiency:
Subsequent to the utilization of asset allocation, each allocation is uniquely tailored to meet different client needs, time-horizon, risk tolerance, and composite of account types. An optimal mix of securities, is different on a case by case basis, unique to each family. For example municipal bonds will be reviewed for suitability within taxable accounts and investments which produce high interest (which are taxed at the higher marginal rates) will be reviewed for placement inside tax-sheltered accounts such as IRAs. We review each account type available to determine where each asset class or security belongs to maximize investor return and minimize income taxes. Taxes are the number one take-a-way of an investor’s total return.
- Financial Planning
- Financial Goals & What Makes You Happy:
- Investment Portfolio Review:
- Net Worth Statement, Accumulation, & Projection:
- Budget Review & Cash Flow Analysis:
- Monte Carlo Analysis:
- Retirement Planning:
- Annual Financial Action Plan Checklist:
- Diversification Analysis & Hedging Strategies
- The Efficient Frontier:
- Investor Profiling & Risk Assessment:
- Uncorrelated Investments, Downside Protection, Alternatives, & Buying Low:
- Insurance & Education Planning
- Policy(s) Need Analysis: term, whole-life, annuities:
- State and Federal Education Savings Account(s):