The "Strategically Engineered Portfolio Program (SEPP)" is a series of model portfolios based on the strategic allocation of low cost Exchange Traded Funds (ETFs) graduated across five risk tolerances:
- Conservative: Lower volatility with some growth potential. Primarily fixed income indexes with a nominal exposure to equity indexes.
- Moderate to Conservative: Moderate volatility with opportunity for growth of capital. Balanced allocation between diversified equity and fixed income indexes.
- Moderate: Long-term capital appreciation with moderate volatility. Diversified exposure to both equity and fixed income indexes, with an overweighting in equity allocation.
- Moderate to Aggressive: Optimal risk-adjusted allocation of equities and fixed income resulting in the potential for growth of capital over the long term. Primarily allocated to diversified equity indexes with some exposure to fixed income.
- Aggressive: Almost exclusively allocated to equity indexes, with a nominal allocation to fixed income. This allocation provides the maximum potential for long term growth of capital.
"ETFs are dream vehicles for fiduciary investors.. advantages of ETFs include their pricing transparency, their tax efficiency, their greater variety, and the economies of scale that can inhere in their greater size."
- John Langbein
Sterling Professor of Law
at Yale University and
Principal Architect of the UPIA
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Our model portfolios are designed to achieve the following advantages:
- Enhanced Performance / Return (relative to applicable benchmark)
- Decreased Risk
- Lower overall expenses associated with the management of client assets
These four benchmarks will always be our focus and the foundation upon which we base our decisions. We believe these are the criteria upon which we should be compared.
Benefits
- Minimize risk in portfolios without sacrificing return (as shown by a lower standard deviation and greater return than the Russell 3000 from 04/1997 to 12/2010)
- Substantially lower cost / expenses associated with the Strategically Engineered Portfolio (SEPP)
Methodology
- Proper Asset Allocation (proven to be responsible for up to 90%+ of a portfolios return, versus individual stock selection, etc.)
- Systematic annual re-balancing of the portfolio back to the original benchmark percentages in January of each year (vs. quarterly or yearly)
- Adding a percentage of the portfolio value to the worst performing sector of the economy for the trailing 12 months every January (i.e. Financial, Consumer Staples, Energy, Utilities, Telecommunications, etc.)
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Model Portfolio Risk Tolerances
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