Investment Management

What We Believe In. Investing.

Private Wealth Asset Management is led by an investment management committee that is comprised of practitioners and consultants whose combined experience is ______ of investing as fiduciaries for their clients. Among the long list of advanced degrees in this group are a Chartered Financial Analyst (CFA) and a Certified Investment Management Analyst (CIMA).


The committee begins it process with a set of capital market assumptions—assumed returns on asset classes based on historical returns with very small, controlled adjustments based on the committee’s views. From these views, an optimizer is used to produce a set of recommended asset allocation models based on targeted returns. These models are then adjusted for accounts with tax preferences and for those nontaxable clients using taxable assets. We believe asset allocation is the key to investment performance as Gary P. Brinson proved in his groundbreaking research:

“Brinson, Hood and Beebower concluded that a portfolio’s asset allocation is the primary determinant of portfolio return variability, with security selection and market timing playing minor roles.”

Source: Vanguard Investment, Counseling & Research paper, Sources of Portfolio Performance: The enduring importance of asset allocation, July 2003, executive summary.

Investment Methodology

Equity investment methodology is driven by a core satellite philosophy. Core satellite combines the benefits of index and active investment management. The core satellite concept recognizes the fundamental differences between index and active fund management and combines the best aspects of both approaches.

The index approach: The primary aim for an index fund is to track market performance (beta) at a low cost to an investor. Index funds achieve this by holding a broad spread of securities within an index with an aim to track the overall performance of the index. An index fund achieves substantial cost savings and will tend to buy and hold these securities with very low levels of portfolio turnover. Lower portfolio turnover results in lower fees to the investor and generally more favorable tax outcomes. The core part of most clients’ equity allocation will be around 80% of the total equity allocation.

The active or satellite approach: The primary aim of an active fund is to seek out performance of the index (alpha) through security selection and/or market timing. At PW we do this in different ways at different times. First we manage a portfolio of ETFs internally that use technical momentum-based indicators to capture asset classes that are outperforming. Second we use fundamental analysis to look at shifts in our asset allocation to favor coming trends in the market such as overweighting. International equities over domestic or increasing our small cap allocation over its optimized level. Finally we supplement these approaches from time to time by offering our clients the ability to invest in some of the world’s best late-stage private companies that are pre IPO. Some of our IC has recently invested in companies like AirBNB, Palantir, Uber and others before they went public. The satellite portion of most clients’ equity allocation is 20%.

Fixed Income

Fixed income plays an important role in portfolio management. We recognize that most clients prize the protection of their capital as much as the return on their capital. We believe that the coming decade will see investors who think they are being conservative make enormous mistakes in fixed income as the nearly four-decade bull market in fixed income comes to an end and interest rates and corporate credit risk begins to rise. As such we reduce that risk at PWAM by focusing on owning individual bonds vs funds, ETFs or indexes of bonds that will suffer from duration risk in rising interest rate times since we can just hold our bonds to maturity.

The core satellite approach is applied here as well. While the individual bonds make up the core at no cost to the investor and with the ability to manage tax exposure. We then focus the satellite portion of the fixed-income portfolio on creating alpha by using our size to access specialty bonds that are sold at discounts due to being an odd lot or like action, and by using our credit research to find undervalued situations. In the end we aim for diversified portfolio management that can produce positive risk-adjusted returns.

Alternative Investing

PWAM maintains a full platform of alternative investments in private equity, private real estate and hedge fund options. Alternatives are used to diversify asset classes and increase returns, as many have a low correlation to traditional investment management. PWAM seeks out not only some of the larger providers of these types of investment opportunities but smaller niche players where more alpha can be found.

Risk-Base Hedging

One of the biggest differentiators between PWAM and others is our work in asset protection—reducing the risk of exposure to our clients. We work with each client to determine the risk they are willing to take. Most firms only reduce risk through asset allocation and the correlation of their investments. Through our hedging activity we can maintain higher equity exposure (benefiting clients when equity markets are positive), but also protect investors from black swan events or major drops in the economy.

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