Defining an appropriate strategic asset allocation is the core of an investment policy statement. It is based on your risk tolerance, investment horizon and objectives.

The allocation is defined in terms of target allocations to specific asset classes, with allowable variances. These variances provide tolerances for periodic deviations from the target allocations based on long-term objectives.

Strategic asset allocation can be thought of as the investment equivalent of a flight plan, i.e. a path chosen to get from point A to point B.

Tactical asset allocation is similar to in-flight decisions pilots make, such as deviating from the plan to avoid bad weather. In the same way, a manager may decide to keep an asset class at the minimum or maximum threshold, depending on the outlook.

Strategic asset allocation, with its long-term outlook, differs from tactical asset allocation. The latter tends to be associated with a short-term deviation from the long-term objective in order to seize an opportunity identified by managers with the aim of improving returns or reducing risks. Over a long time horizon, strategic asset allocation should be a dominant factor in achieving portfolio returns.

Our goal is to identify and recommend portfolio managers with a demonstrated ability to practice their sound investment philosophy with rigour and consistency over multiple market cycles.

We select managers based on our assessment of their ability to adhere to their critical success factors over time.

We focus on risk management and cost/value-added ratios. If no manager meets our requirements for a specific mandate, we will opt for a passive strategy.

Our philosophy is based on the following principles:

1. With capital preservation as a primary objective, tactical decisions are focused on risk management rather than opportunism.

2. Rebalancing responsibly, but not excessively, can minimize transaction costs.

3. The selection of specialized managers should add significant value over time.

We believe that an appropriate, well-defined strategic asset allocation is the foundation for building a portfolio that combines best-in-class managers of both traditional and non-traditional asset classes. This approach supports the achievement of long-term objectives.

Our clients benefit from state-of-the-art technology that enables them to obtain detailed information reports for both traditional and non-traditional investments. Patrimonica uses best practice reporting. Returns are net of fees and compared to globally recognized benchmarks. The platform used also gives clients access to this information in real time, via a secure cloud-based app.

We focus on after-tax returns. Portfolio decisions with major tax implications are carefully considered in terms of potential returns and relative risk. Our team works closely with our firm’s tax experts to develop strategies for optimizing or potentially deferring taxes.