CURRENT CLIENTS

Investment Solutions

A client-focused approach suitable for a range of financial situations and aspirations

"Be invested
at a comfortable level of risk,
properly positioned to seek
greater expected return."

Our approach to managing client portfolios can be summed with this simple suggestion. The first directive, “Be invested,” suggests what to do, not how to do it. The second recommendation, “at a comfortable level of risk,” is the first step in choosing the optimal allocation for client assets. And a further step for many will be to position the portfolio in an effort to increase the potential for outperformance relative to the markets in which the portfolio is invested.

Each client is different in attitudes regarding market risk and needs to take on market risk in order to achieve longer-term financial goals. To address those differences, SRCM offers a range of investment allocations that we target using investment models. Each is distinct by the level of investment risk it assumes, defined primarily by its exposure to stocks. Of course, all investing carries risk, and we may also seek incremental return in other investments, too, accepting the potential additional risk that comes along with.

Each step up in the percentage of the portfolio invested in equity reflects an increasing amount of expected return and risk.

To the extent we want a market allocation at a chosen level of risk, we build what’s called a passive portfolio. We find this approach to be the simplest, most efficient way to provide investment exposure. In fact, we use benchmarks comprised of the same index-based allocations to gauge the performance of all our models. But for most folks, a portfolio that is a bit—or even a good bit—different than the market may make more sense. To address those differences, additional models reflect active decisions to diverge from the market. These decisions to tilt away from the market may be pursued in order to seek additional return and reduce overall risk. With these decisions, we begin to be flexible to the client’s attitudes toward investing, the expected returns different types of exposures reflect and, as importantly, the amount of expected risk they present.

Based on our conversations with regard to tolerance for investment risk in the context of short-, medium- and long-term plans, we assign a model (or multiple models) to each portfolio we manage for a client. Each model consists of defined percentage-based targets to investments in individual exchange traded funds (ETFs) and/or mutual funds that represent specific exposures we wish to include in the portfolio. The components of these models may change over time as the Investment Team adapts exposures to the broader investment environment and the availability of investment solutions we find more appropriate for client accounts. All subsequent contributions to each account are utilized to maintain those target weights, as each investment likely will see a different return. Those differences in returns may require that we rebalance the portfolio back to target, so the Investment Team reviews each account, minimally on a quarterly basis, with respect to this target allocation. Also on a regular basis—at least once per year, but preferably more often—advisors will sit with clients to discuss portfolio performance and positioning, while also addressing changes in financial situations and longer-term plans to see if any adjustments to reposition the portfolio allocation(s) are necessary.

Passive
Global
Utilize two ETFs that represent the global equity market and the U.S. investment-grade bond market to align the portfolio allocation with the desired level of market risk
U.S. Focused
Utilize two ETFs that represent the U.S. large-cap equity market and the U.S. investment-grade bond market to align the portfolio allocation with the desired level of market risk
Multifactor
DFA
Utilize mutual funds managed by Dimensional Fund Advisors to incorporate equity investment tilts. We variably allocate to risk within fixed income, with expected return/risk increasing along with increase equity exposure
BlackRock
Utilize ETFs managed by iShares to incorporate equity investment tilts. We variably allocate to risk within fixed income, with expected return/risk increasing along with increase equity exposure
Passive Plus
Combine one of the Passive portfolios with one of the multifactor portfolios in order emphasize market-like aspects of the portfolio. We variably allocate to risk within fixed income, with expected return/risk increasing along with increase equity exposure
Multiprovider
Combine the Blackrock and DFA equity investment approaches in a single portfolio
Fixed Income
ETF Ladder
Combine fixed income ETFs with defined annual maturities. The approach is variable with regard to interest rate and credit risk and potentially allows for the portfolio to provide regular (annual) liquidity, while also being relatively efficient for interim liquidity requirements. The approach further allows the portfolio to adapt to the broader interest rate environment

Each model within the series above is adaptable to specific client situations and is available in a tax-advantaged composition.

19900 MacArthur Boulevard
Suite 920
Irvine, CA 92612
949.261.7726
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