Asset allocation as used in our investment strategy aims to balance risk and reward by apportioning a portfolio's assets to complementary classes.
We utilize and define the main asset classes of equities, fixed-income, commodities, alternatives (Real Assets, Hedge Funds, Commodities/Currencies, Private Equity/Venture Capital, Direct/Local Investments), cash and equivalents. The various assets classes tend to have different levels of risk and return, so each may behave differently over time. We further break down asset classes by market capitalization, geographic regions, themes, and sectors.
We believe asset allocation involves an important set of decisions, and although our process to select best-in-class securities is possibly just as important, the way we allocate investments across the classes may be the principal determinants of our investment results.
In many cases client asset allocation needs require utilizing external investment managers (funds). We often screen external managers on their ESG policies, and practices, as well as reviewing their underlying holdings to help optimize client allocation needs that are not directly managed.
Core Capital is client specific in terms of mission, values, goals, time horizon, tax considerations and risk tolerance. In general, the portfolios are engineered first using traditional portfolio metrics and adjusted based on the specific client inputs mentioned above. In general client portfolios are managed as Thematic Values Driven Tactical Allocation with the guideline: Static Asset Allocation + Global Macro + Financial + ESG = Tactical Allocation Output