Money Management

 

RIA Advisors money management services is focused on the growth and preservation of our client’s wealth.

The investment process is an active asset management approach built around the client’s goals, objectives, risk tolerance, behavioral biases and specific “hurdle rate” which is derived from our unique approach to financial planning. The portfolio management approach is designed to deliver returns in a disciplined manner to both avoid dramatic market declines and the emotional biases which lead to poor long-term investment decisions.

There is no limitation to the asset classes that can be used for each piece of the allocation model:

  • Cash: Money Market Funds, Short Term Bonds, Short Term Bond Funds, Repurchase Agreements, Short Term Certificates of Deposit, Bank Paper, Other Investments With A Maturity Of Less Than 90 Days.
  • Fixed Income: Investment Grade Corporate Bonds (BBB-AAA), Treasuries, Agency Issued Bonds, Municipal Bonds, Non-Investment Grade Bonds, Convertible Bonds, Closed End Bond Funds, Preferred Stocks, Domestic Bond Funds, Foreign Bonds, Foreign Bond Funds, Other Investments With Maturities Longer Than 90 Days.
  • Equities: Stocks, Equity Mutual Funds, International Equity Funds, Closed End Equity Funds, Money Managers and any other equity related or stock market related investment that fits within the investment parameters of the client.
  • Alternative Strategy: Commodities, Commodity Funds, Currencies, Currency Funds, Short Funds, Hedge Funds, Private Placements, Private Real Estate, Public and Private REITS, Options, Derivatives and any other non-traditional investment vehicle that may come available that fits within the investment parameters of the client.

Assets are selected for each piece of the portfolio based on a number of both technical and fundamental factors. Those assets are then managed to adjust the exposure of the portfolio to “risk” based on strenuous and consistent quantitative and statistical analysis. With this additional risked-based analysis, the goal is to further reduce the downside risk of the portfolio.

The goal of the portfolio is an 80% capture rate of advances in the financial markets with a maximum drawdown of no more than 20% of the overall market’s decline. Over the long-term, the minimization of capital destruction will generate excess market returns. This is the basic tenant of investing in action: “buy low, sell high.”

While it is easy to buy investments, it is quite a different matter to know when to sell them and take profits. By having a strict, unemotional, and disciplined approach to money management, the “buy/sell” decisions become a function of the overall process. While investing for the long-term is extremely important; it is also important to avoid the major market declines that can undermine those long-term goals

The Models

At RIA Advisors, we do believe that investing for the long-term is a winning strategy and our portfolios models are designed with a long-term approach in mind. This is why every model carries three primary components were designed and developed by our team.

  1. Fixed Income Sleeve –managed for the direction and trend of interest rates.
  2. Core Equity Sleeve – a small core of equity investments which are long-term holds.
  3. Tactical Equity Sleeve – a portfolio of equities tactically managed against market risks

Equity Model

Equity Blend

ETF Sector Rotation Model

Each portfolio represents a baseline asset allocation model. This means that each can be fully customized for a client’s behavioral risk profile and the current macro-economic environment, using advanced fundamental and technical market analysis. Our models are designed to provide flexibility based on current economic and market conditions.

Portfolio Construction

The process is driven by three (3) primary drivers:

  • Fundamentals – determine WHAT to buy.
  • Technicals – determine WHEN to make buy/sell decisions
  • Reversion To The Mean – deviation from long-term means determine HOW exposure to “risk” in portfolios is evaluated.

The Process is built upon three defined and disciplined processes to:

  • Select Assets
  • Make Timely Buy/Sell Decisions
  • Manage Overall Portfolio Risks

We also understand that the economy and markets cycle over-time and therefore the portfolio needs to adapt to those cycles as well. Given that the market leads the economic cycle, we pay close attention to where we allocate assets during these cyclical movements.

Asset Selection Styles Rotate With Market Cycles

Once we understand the more “macro” view of the market, then we drill down into the markets to select the assets which are appropriate for the given cycle which also meet our very strict fundamental and technical criteria.

Investment Process

Assets are selected for each piece of the portfolio based on a number of both technical and fundamental factors.

The goal of the portfolio is an 80% capture rate of advances in the financial markets with a maximum drawdown of no more than 20% of the overall markets decline.

Over the long-term the minimization of capital destruction will generate excess market returns. This is the basic tenant of investing in action: “buy low, sell high.”

Equity Selection Process

Requirements:

  • Definable
  • Standardized
  • Repeatable

Define Primary Universe

  • S&P 500
  • S&P 1500
  • Entire Universe

Run Primary Screen

  • Value
  • Momentum
  • Growth

Working Candidate List

  • Reduce candidates via secondary scoring process

Final Candidate List

  • Screen against technical criteria

Generate Buy/Sell/Watch List

  • Move to portfolio construction process

At RIA Advisors, our planning is goals-based and centered on meeting your financial objectives. Your RIA Advisors team advisor has the expertise and experience to “slide” or tilt your personal allocation in the RIA Advisors portfolio to reflect your personal preferences, current stock market values and the returns required to successfully reach your specific financial goals.

To implement your asset allocation strategy, RIA Advisors uses low cost exchange-traded funds, no-load mutual funds or institutional money management. We follow a buy-rebalance-sell discipline where portfolios are rebalanced based on specific, academic-based rules. Your personalized, customized allocations are reviewed by our staff at a minimum of every 60 days to determine rebalancing opportunities.

Reflecting our commitment to serving our clients, your RIA Advisors team can rebalance your portfolio in case of a major life event, such as a death, marriage or divorce. We will respond quickly to your situation and help guide you during this critical time.