Are Your Custom Portfolios Truly Custom?
By: Advisor Partners, LLC
Many asset managers have one-size-fits-all portfolio solutions. Their custom portfolios are not customizable; they contain core securities that remain in each portfolio they build. We take a different approach to portfolio construction. Advisor Partners constructs portfolios using a combination of investment expertise with financial theory, bringing the best of both worlds to address client needs. Our quantitative risk management approach is embedded in each of our strategies. We recognize that each client is unique, and we design personalized solutions customized to clients’ specific needs. This is especially important in an industry racing towards uniform, standardized solutions. Each component of our process is implemented through in-house technology, allowing us to deliver institutional-caliber solutions in a scalable manner.
By using asset allocation models based on clients’ objectives, full client customization begins to take place. Upon defining with your client his/her investment profile (financial situation, risk tolerance, investment horizon), we begin to build a custom portfolio. We are proactive in modifying the portfolio in light of investment opportunities and expectations of the client investor.
What if you could customize individual portfolios to reflect a client’s values and beliefs, while at the same time delivering market returns? Advisor Partners expands this philosophy to all of our products, including ESG/SRI portfolios. Competitors using mutual funds/ETFs don’t have this flexibility. These vehicles often have (or do not have) securities that do not (or do) reflect investors’ social values. Using only negative screens could potentially cause negative alpha*. To offset this risk, Advisor Partners uses both positive and negative screens in our ESG/SRI portfolios.
Through sophisticated programming software and intelligent mean variance risk analysis, it is now possible to create custom portfolios for advisors and their clients. This means that if a client wants Large Cap Growth market exposure, but wants to eliminate fossil fuels, it can be built to track the selected market exposure. For taxable accounts the portfolio can be set up with a tax aware overlay that will have a sophisticated rebalance and optimization option added.
Advisor Partners provides client-centric and seamless coverage by effectively tailoring client portfolios to help meet their financial goals and to ensure that client’s investments reflect their long-term objectives. Contact us to learn more about how we can help your clients achieve their investment goals.
*Source: http://www.cfapubs.org/doi/full/10.2469/dig.v47.n7.1
The Current State of Socially Responsible Investing
By: Advisor Partners, LLC
Socially responsible investing (SRI) has come a long way from its roots in the 1920s where churches would screen out “sin” securities. Historically, SRI typically applies a set of negative screens to a group of publicly listed securities – for example, a mutual fund that avoids investments in tobacco, alcohol and firearms. However, in recent years we have seen SRI evolve to include other factors including positive screens, community investment, and shareholder advocacy.
Today, the SRI investor often wishes to evaluate a company’s social and environmental qualifications as well as the core products they produce. These additional layers of research give social investors insight into some very subjective areas, which can be thought of as management’s foresightedness or good governance. The thought is that the better governed a company is, the more likely a company is to outperform their peers.
Social investors screen in profitable companies that also show evidence of strong employee relations, a solid record of community investment, superior environmental practices, respect for human rights (throughout the supply chain), and produce safe products.
Conversely, investors screen out investments in companies that fall short in these areas.
Because of the greater depth and additional nuance of SRI research, it is common for SRI analysis to boost or stabilize financial performance by either: (a) avoiding corporations whose sub-standard practices can result in liabilities that risk shareholder value, or (b) discovering opportunities in areas that traditional Wall Street analysis may overlook.
Advisor Partners builds customized SRI portfolios using individual securities that have passed either a positive or negative screen. Advisor Partners does not employ the use of “one-size-fits-all” SRI ETFs or mutual funds. By managing our SRI portfolios through SMAs we can deliver a high level of customization without sacrificing the investor’s values or alpha. Advisor Partners will maximize your client’s investment without sacrificing personal values. Contact us to learn more.