Asset Allocation

Asset Allocation Models

EQM Capital LLC can create turn-key Asset Allocation models utilizing individual assets, mutual funds, and/or ETF’s tailored to client risk, time horizon, and investment goals.

The following Asset Allocation strategies can be utilized by advisors to meet their client’s needs:

Strategic Asset Allocation – targets a “base policy mix based on historical rates of return for each asset class.

Constant-Weighting Allocationwhereas Strategic Asset Allocation implies a “buy and hold” strategy, changes in asset values cause initial percentages to change.  A constant-weighting approach rebalances the portfolio on a regular basis (eg. quarterly) in order to return the portfolio to its established policy mix.

Dynamic Asset Allocation – the asset mix is constantly adjusted based on the rise and fall of the asset mix and based on changes in economic conditions.  With this strategy, you are selling assets that are declining and purchasing assets that are increasing, just the opposite of constant-weighting allocation.

Tactical Asset Allocation – to the extent that Strategic Asset Allocation is rigid, Tactical Asset Allocation engages in short-term, tactical deviations from the mix in order to capitalize on certain investment opportunities.  This flexibility adds a “market timing or rotational” ability to the portfolio, allowing clients to participate in short-term market opportunities.

Integrated Asset Allocation – with Integrated Asset Allocation, both economic expectations and risk is utilized in establishing an asset mix.  While other asset allocation strategies take into account future market returns, not all strategies take into account risk tolerance.  An integrated approach takes into account expectations, changes in capital markets, and risk tolerance.  Furthermore, it can adopt either a dynamic or constant-weighting approach.

Core-Satellite Asset Allocation– the Core-Satellite approach utilizes traditional equity and fixed income based securities, ETF’s, and/or mutual funds to make up the “core” portfolio.  Core holdings can be actively or passively managed.  The “satellite” portfolio allocation is comprised of holdings expected to add alpha, diversification, and timing benefits.  Satellite portfolios integrate tactical or specialized asset classes such as alternatives, REITs, commodities, emerging market bonds, and/or country ETF’s.

When it comes to Asset Allocation, there is no single “right” approach.  But arriving at the approach that best suits your firm and your client’s needs is a critical business decision.

Asset Allocation solutions are available on a negotiated one-time fee basis.