Asset Management Services
The careful administration and management of one's assets is central to successful wealth management. The need for investors to create and maintain an effective portfolio
(one that is designed to achieve a client's goals and objectives with
the appropriate consideration given to risk tolerance, obligations, and
constraints) has always been paramount. However, for many the investing
focus tends to be centered in the “hot idea” with little regard for the
all-important principle of a well-diversified portfolio.
Through sound portfolio management principles, Blue
Marble Research creates and maintains customized, well-diversified
portfolios for qualified clients. This is accomplished by applying the
analytical methodologies described in the Methodology portion of this
website to a global macro, long/short portfolio approach. The unique
blend of GEM, thematic investing, technical analysis, and
diversification with a tilt provides client portfolios with the best
opportunity to consistently generate alpha (excess risk adjusted returns over the market).
A Few Portfolio Management Factors to Consider
On the assumption that we are talking about managing
a portfolio (as opposed to an occasional trade or an unorganized,
undisciplined approach to managing one's money), there are four primary
ways an investor can be successful in the stock market. They are:
- Arbitrage (typically by one asset, sell another, make money from the spread)
- Trading (primarily information based)
- Diversification with a Tilt (also known as sector and style allocation)
- Concentrated portfolio (think Warren Buffett, only not just value investing)
The first two do not work
for most investors. Arbitrage requires a complex system to exploit
pricing anomalies, while trading, specifically very active trading
(primarily day trading), requires both an information pipeline and the
trading speed to exploit the opportunities. That leaves the last two,
Diversification with a Tilt and Concentrated Portfolio, which can and do work for investors PROVIDED they understand a few key elements about them.
Diversification with a Tilt
is the predominant method employed at BMR. But for it to work, an
investor must accept the following premise - over longer periods of
time, stocks have an inherently upward bias. The data supports this, as
does understanding the basics of economics (the social science of
people). The portfolio strategy goal is straightforward - outperform
the market in both bull and bear markets by tilting the portfolio mix
in favor of one or more of the ten economic sectors of the global
economy that look attractive and away from those sectors that are
determined to be less desirable. In the process, portfolio positions in
both individual sectors and styles are expanded and contracted as
needed as well as the overall asset allocation decision. (Note: We are
not talking about trading but active portfolio management.)
The Concentrated Portfolio approach
also works as it tilts the portfolio like a diversified portfolio with
a tilt approach does, however, money is concentrated in fewer positions
with a secondary regard for a well-diversified sector and style mix
(meaning a heavy exposure in one economic sector, say Energy, may be
the result). Moreover, the Concentrated Portfolio approach tends to
have more of a buy and hold feel to it as longer-term mega trends and
themes form much of the basis for the individual investments made (e.g.
infrastructure, aging populations in developed economies, and rising
middle class in emerging economies).
For most BMR clients, a Hybrid approach
is taken whereby individual client portfolios follow the much
longer-term Concentrated Portfolio approach while also having money
invested in a fund managed by BMR (accredited investors only) employing
the more actively managed Diversification with a Tilt approach.
To learn more about our asset management services and for a free, confidential consultation, please contact us.
