Risk-Managed Personal Investing at a Lower Cost

Clear View Wealth Advisors: Our Approach to Investing

Core Strategic Asset Allocation with Tactical Dynamic Management

We believe that clients win by not losing.

So, our emphasis is on managing risks in a client’s portfolio.

By using a combination of asset allocation, dynamic trading signals and hedging strategies, we provide a number of built-in protections for our client portfolios.

We combine these elements to create an overall portfolio and strategy aligned with your investment policy statement and specific to your needs, time horizon, risk tolerance and risk capacity.

We begin the portfolio construction process with strategic asset allocation (SAA) which is based on the general principles of Modern Portfolio Theory (MPT) to develop, monitor and manage a portfolio that balances risky assets (like equities) with less risky assets (like debt instruments).

Tactical is Practical – Dynamic Investing Approach

We do not subscribe to a simplistic ‘Buy-Hold-Pray’ approach. While academic theory shows that investors gain over time as long as they stay fully invested, reality has shown that approach goes counter to the behavior of most investors. And we realize that a significant draw-down in your account value may be devastating to your life plans.

So, we’ve developed our models to combine core strategic asset allocation with tactical buying and selling decisions for the satellite portions of the portfolio. Our tactical trading is based on signals developed from market conditions, sentiment, and trends identified in select securities or sectors. It may also be based on recommendations provided by third-party research services.

Using these rules-based signals allows us to take the emotion out of the investment decision process which helps us help our clients avoid the costly mistakes that may come from panic-driven selling at a bad time.

Global Portfolios to Reduce Risk

Our goal is to build you a globally diversified, tax-efficient portfolio that combines management investment styles and includes proactive hedging to protect your portfolio on the downside.

We build our client portfolios based on time-tested approaches and research using individual securities, index mutual funds, exchange traded funds (ETFs) or other low-cost investments.

When selecting securities and investments, we generally have a preference for low cost options, whether actively or passively managed, except in cases where historical return or risk-adjusted measures warrant higher expenses.

Our focus is on finding asset classes or managers that can contribute to the portfolio’s sustainability because of a demonstrated edge when dealing with market volatility.

Controlling Costs and Passing on the Savings

There are few things that can be controlled in investing. But one certain way to help improve returns is to control what you can. When it comes to investing, this means controlling your costs.

By using technology and state-of-the art custodial trading platforms, we have developed models that are scalable and cost less to manage. And we have passed on these savings to you in the form of lower asset management fees.

While most firms will start with a sliding-scale asset management fee beginning around 1.5%, we offer personalized programs beginning at 0.40% per year plus custodian platform fees (0.20% – 0.25% per year). On top of this managed core allocation, we offer additional advisor-directed portfolios that we manage or our partners manage as sub-advisors for an additional optional fee using their risk-managed tactical approaches.

Since we focus on using individual securities, Exchange Traded Funds and index mutual funds, your costs are further reduced when compared to the typical program offered that is based on active mutual funds with an expense ratio that is on average above 1.1% per year.

Diversification and Risk Management

Clear View Wealth Advisors employs asset allocation strategies that have two key features:

Diversification: Allocating capital into a wide array of assets available in any given plan. Major assets include US equity (further separated into small, mid and large cap with value and growth styles), International equity, emerging market equity, domestic and international real estate investment trusts (REITs) , commodities and fixed income (US corporate bonds, treasury bonds, inflation protected treasury (TIPs), foreign and emerging market bonds).

Risk Management: Allocating capital based on personal risk tolerance. The strategies rigorously monitor portfolios and perform necessary rebalancing. Equities (stocks), commodities and certain fixed income funds such as high yield corporate bonds and long term treasury/corporate bonds are classified as risky assets. Clear View Wealth Advisors uses a number of Risk Profiling tools to gauge a client’s specific risk appetite which is used to control the allocation of risky assets.

Strategic vs. Tactical Asset Allocation

Strategic Asset Allocation (SAA) is based on widely practiced modern portfolio theory: the portfolio diversification into an array of asset classes which are not strongly correlated. The allocation is based on your risk tolerance and the long term asset return characteristics. SAA periodically rebalances asset allocation based on present target allocation. It only makes major allocation change if a major life events such as retirement, marriage, college education occurs.

Tactical Asset Allocation (TAA)is based on a key factor of asset price trends. Researchers have found that return (price) momentum in major assets can improve risk adjusted returns dramatically. TAA dynamically changes the asset allocation based on major asset trends while preserving the acceptable risk tolerance. It does not try to take advantage of minor assets, sectors or industries trends which are more unpredictable.

SAA adheres to a preset allocation while TAA tries to take advantage of intermediate asset trends. In general, SAA works best in economic expansion cycles while TAA works best in economic cycles in which strong trends are present. TAA performs much better in market downturns.

Investment Philosophy and Research

Every portfolio is hedgeable, without the use of complex derivative instruments. We have updated the practice of Modern Portfolio Theory by using dynamic asset allocation to promote portfolio growth over full market cycles and by using specialized ETFs and mutual funds that focus on hedge strategies.

Our philosophy has four primary goals: