Our core investment management strategy constitutes multiple global asset allocation portfolios which are comprised of low-fee, efficient funds structured to track specific global equity and debt indexes. This asset allocation investment strategy is based on leading financial market theories, including:
Markets are efficient
Eugene F. Fama of the University of Chicago developed the efficient markets hypothesis in the 1960s, which asserts that: securities' prices reflect all available information and expectations, current prices are the best approximation of intrinsic value, price changes are due to unforeseen events, and although stocks may be mispriced at times this is a rare condition that cannot be systematically exploited.
Risk and return are inextricably linked
Harry Markowitz won the Nobel Prize in Economics for his work on building optimal portfolios through diversification. His theory emphasized making investment decisions based on risk, evaluating investment performance at the portfolio level, eliminating specific stock risk through diversification, and holding assets that are not highly correlated. Markowitz’s “efficient frontier” was a theoretical set of portfolios that allowed an investor to expect certain levels of return if the investor was willing to take on certain levels of risk.
Guided by these two major market principles, the Parkside asset allocation and portfolio construction process becomes a matter of identifying the risks that drive portfolio returns and of determining a client's appropriate degree of exposure to those risks. Portfolio diversification helps reduce certain risks (for example, company-specific risks), and portfolio structure allows an investor to anticipate a range of portfolio returns by bearing an appropriate level of market risk (e.g. systematic risk) in the global equity and fixed income markets.
Parkside’s portfolio structures and asset class selections are determined by the firm's investment committee and incorporate a variety of factors, including our ongoing views of global and macro-economic factors, central bank policies and interest rate expectations, and industry and sector-specific trends, amongst others.
We develop an investment plan and asset allocation portfolio with you and then manage the investments in your accounts, monitoring and adjusting positions to reflect market conditions and rebalance it as needed to maintain a desired allocation. We regularly review with you the growth of your investments within the context of your risk tolerance, time frames and financial goals, and our systems allow you 24/7 online access to view your account holdings in detail.