Risk is the one constraint that all investors have. We believe an investor’s reward should be proportionate to the amount of risk their portfolio takes on and that long-term returns are best achieved by managing risk through a diversified strategic asset allocation. We strive to construct portfolios with an awareness of the origins of risk. This knowledge informs our decision-making and ensures our guidance is intentional.
- High correlation among assets may introduce additional downside risk, especially during stressful market events.
- Less-correlated assets equate to portfolio diversification.
- Different assets may share similar sensitivities to risk factors.
- Portfolios with high concentrations to any one risk factor may increase the potential and severity of an unexpected loss.
*Factors are characteristics specific to a group of investments that help explain return and risk.