Our Approach

Reducing portfolio risk by as much as 40-50% compared to traditional portfolios and delivering consistent returns does not happen by accident. Our team of experienced managers has designed and utilizes a disciplined, four-step process to achieve these objectives. Here’s how we do it:

Set the Strategic Asset Allocation

Setting the strategic asset allocation is the first step in the process.  Here, we set the long-term benchmark allocation to the various asset classes which will be used in the portfolio. Simply including a meaningful allocation of alternative fixed income, alternative growth and absolute return investments is the easiest way to reduce risk. Adding more asset classes gives more diversification than the traditional stock/bond approach.  In the colloquial sense it means more baskets for your investment eggs versus all your eggs in one or two baskets. In addition to determining the strategic percentage allocation for each asset class, Alitis also assigns acceptable ranges in which they may deviate up or down from their target allocation. The strategic allocation represents a neutral position reflecting where we see the best long term opportunities in a stable investment world.

Make Tactical Shifts in the Asset Allocation

At this step, we specifically choose to overweight or underweight each asset class within the acceptable ranges determined previously. Tactical shifts away from the neutral strategic asset mix reflect our views on where we currently see the greatest risks and opportunities. Based on our research, we adjust our mix quarterly to deliver what we expect will be the best risk-adjusted returns over the next year.

Select Appropriate Investments

Choosing investments from our approved list is where a portfolio takes shape.  Generally, we will use a broad range of actively-managed and passive investments (ETF’s)– most of which are also very diversified.  We tend to use actively-managed investments in areas where active management can add value and passive investments in areas where value is difficult to add.  A typical balanced portfolio might hold 25 to 40 individual investments which, together, may represent thousands of underlying stocks, bonds, real estate, private debt & equity, commodities, and currency positions.

Rebalance the Portfolio Regularly

The last step in our portfolio management process is our adherence to rebalancing.  Asset classes and individual investments are continually monitored for deviations from their target weighting. Each asset class is allowed to deviate from its target allocation by a certain amount.  Beyond this threshold, we will buy or sell investments in that asset class in order to restore the asset mix to its target weighting. Similarly, each investment is allowed to deviate by a certain amount from its target weighting. The effect of rebalancing is that investments that perform well are gradually sold off while underperforming investments are slowly accumulated. Buying low and selling high, using a defined process that reduces the effects of emotions has been shown to increase investment performance and reduce portfolio risk.

Our investment process is not about looking for hot investments.  Rather, we try to add incremental value at each stage of the process by doing the little things that improve risk-adjusted returns.  To use a baseball analogy, we don’t try to hit home runs and take the risk of striking out; rather, we endeavour to hit singles and doubles consistently – a more conservative approach to growing your portfolio.