From the beginning, Tanglewood Family Office has utilized our “active conservative” investment management process, a term that describes our daily monitoring and managing of a small number of conservative client portfolios. Investment management decisions are directed by our quantitative and qualitative models that help guide our broad asset allocation decisions.
Within that framework, we use individual equities, bonds and cash vehicles to help manage potential growth and risk. Our investment format seeks risk-managed returns, transparency, daily liquidity, low market correlation, and flexible market exposure.
In recent years, conservative investing has been turned upside down. Classic Investment strategies that stood for decades as the standard for conservative money management have appeared largely ineffective during recent periods of great economic uncertainty and turmoil. As the markets went down with a fury, everything unattended went down with them. When the dust cleared, many conservative investors seemed to have portfolio losses similar to those with an aggressive investment strategy.
It has been our observation that much of the painful loss suffered by conservative investors was the result of employing a passive asset allocation strategy. By passive we mean buying-andholding or relying on an occasional asset allocation “tweak” of outside money managers or retail portfolio holdings. Problems may also be attributed to advisors trying to respond during a crisis to dozens or even hundreds of client accounts.
Academic studies have shown that asset allocation and stock selection are the major contributors to the variability of a portfolio’s return. While there are no guarantees, and every investment strategy carries risk, we find the combination of daily portfolio oversight, coupled with active risk management, may help smooth volatility and help to keep a conservative portfolio more conservative.
Stock investing involves risk including loss of principal.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and are subject to availability and change in price.
Asset allocation does not ensure a profit or protect against a loss.
Qualitative and quantitative analysis does not eliminate the risks associated with investing. No strategy assures success or protects against loss in periods of declining values. Investors should be aware that no investment advisor can accurately predict all of the changes that may occur in the market.
“Try? There is no “try”. There is just do or don’t do.”