We have been running custom portfolios for over 15 years and offer two main portfolio types designed to help clients reach their financial goals. Our Smart Risk Portfolios take a dynamic approach to asset allocation and were specifically designed with tax-advantaged 401k and IRA accounts in mind.  Our Tax-Efficient Portfolios offer strategic exposure to a wide range of asset classes and aim to reduce the effects of taxation on your account.  This goal is especially valuable for investors in high income tax brackets.

Reaching your financial goals is a lot like sailing a boat from San Francisco to Hawaii.

You can plot a straight-line course and take off with high hopes, but that won’t guarantee you get to the islands. You will encounter winds and current changes that will throw your boat off course.

The same holds true for your financial goals. Investors often pick a few mutual funds in hopes that sooner or later they will reach their financial goals. But like the sailboat, market winds and economic currents may throw your investment strategy off course.

That’s why we believe the best approach is to constantly monitor the conditions around us and make adaptive adjustments to keep you on course to help achieve your financial goals.

We designed the WealthPath Smart Risk Portfolios to give clients a one-stop diversified investment option designed to adapt to changing markets. These portfolios are available in individual wealth management accounts and as collective trust funds for use in retirement plans.

Our investment process, although sophisticated in its implementation, is simple in nature - it is designed to invest in the areas of the stock market showing strength and avoid areas showing weakness. This approach gives us the potential to take advantage of opportunities in up markets, while attempting to mitigate risk in down markets. We monitor trends in market sectors based on company size and style and over and under-weight certain sectors, based on those trends.

This quantitative methodology – which we call “Dynamic Asset Allocation” – means our disciplined decisions are based on well-defined procedures and formulas. This removes subjectivity and uncertainty when compared to investment methods that rely on prediction and intuition.

SMART RISK PORTFOLIO CHOICES

We offer five Smart Risk Portfolios, designed to help meet the unique needs of each of our clients.

Because these portfolios target a given level of risk, we don’t attempt to time the market based on guesses about short-term returns. History has shown few, if any, investment managers can do that well.

INVESTMENTS, DIVERSIFICATION, AND COSTS

For purposes of performance, cost, and liquidity, we primarily use low-cost, indexed mutual funds or Exchange Traded Funds (ETFs) inside our investment portfolios.  Each fund usually holds hundreds of individual stocks or bonds, so clients are provided exposure to a broad range of investments.

We work hard to minimize total costs to clients, since every dollar saved in expenses is another dollar that remains in the account to fund your future goals.

We manage our portfolios so that there are no front/back loads and no time commitments. You are free to add or remove money on any day and have full online access to view your account balance and holdings at any time.

SMART RISK PORTFOLIO PERFORMANCE HISTORY

Since 2003, our experience and rigorous methodology have given investors a track record of performance that we are very proud of. We use an independent performance verifier to calculate our returns each quarter. Contact us to learn more.

Designing a tax-efficient investment plan can produce better after-tax returns for investors in higher tax brackets.  For this reason, we designed 3 tax-efficient portfolios that are differentiated by the target amount of stock exposure in each portfolio (80%, 60%, or 30%).

These portfolios use what are referred to as “factor tilts” to invest more money in areas of the market that have historically outperformed over multi-decade time horizons.  In an effort to manage portfolio risk, they invest in a widely diversified mix of assets.

TAX-EFFICIENCY STRATEGIES

Higher income investors or trusts may be paying over a 40% total tax rate on gains for securities held for less than one year, so it can be a big advantage to hold positions in the account for over a year and pay the lower long-term capital gains tax rates.  Our tax-efficient portfolios aim for longer hold periods and incorporate other strategies described below to attempt to increase long-term after-tax returns.

We may also enhance tax-efficiency by using Exchange Traded Funds (ETFs) instead of mutual funds for many of our holdings.  Because of the way ETFs trade on an exchange, they may be more tax efficient than mutual funds.

Municipal bonds may provide additional tax benefits, since the interest they pay can be free of federal and state income taxes in some situations.

A final way we can help control taxes for these portfolios is by tax loss harvesting.  In some years, we may be able to sell positions sitting at a loss to offset positions that were sold with gains, to reduce otherwise taxable capital gains.

INVESTMENT SELECTION

Many of the investments in these tax-efficient portfolios attempt to take advantage of historical market factors.  For example, weighting stocks in an index by their size (“cap weighting”) is the most common method but has generally under-performed other approaches over the long-term.  We have the flexibility to integrate alternative weighting styles such as value weighting, momentum-weighting, and low-volatility weighting based on the historical factors for each style.

We also include a selection of international stocks and bonds since they tend to perform slightly differently than standard US stocks and bonds. All investments in these portfolios use standard ETFs and mutual funds that don’t have any asset lockups, redemption fees, or front loads. We do not receive any compensation for including a specific fund or fund company in our portfolios, so you can feel confident that the funds were selected with your best interest in mind.

Neither Pensionmark Financial Group nor its advisors provide tax or legal advice.