Comprehensive goal planning

In the name of scale, many wealth management firms today have designed a rigid process designed to fit you into a model portfolio with an automated rebalancing strategy, and they move on to the next client. We believe that individuals and families with significant wealth can benefit from the rigor and sophistication that typically characterize institutional portfolio management. Our process starts with comprehensive goal planning. Our approach to managing client assets is rooted in the following core strengths:

  • Deep understanding. Before we invest any money for a client, we first determine the client’s goals, tolerance for risk, time horizon, tax situation, and other constraints. We measure these factors against our extensive knowledge of investments. Only then do we consider asset allocation and diversification.
  • Disciplined portfolio construction. Based on the specifics of each client’s situation, we provide exposure to an appropriate mix of assets classes. We also seek to provide diversification within each asset class—across sectors, industries, countries, and fundamental risk factors.
  • Rigorous oversight. When implementing a client’s investment strategy, we do not use one-size-fits-all automated rebalancing programs. We diligently monitor asset classes and individual companies daily and actually look at our client portfolios on a regular basis, particularly when new positions are added and existing positions sold.

Portfolio Management

At SC Capital Advisors, we stay abreast of the latest in institutional portfolio thinking. Increasingly, institutional investors are targeting “factors” or drivers of long term returns across asset classes identified by academic research.

Core and Factor Portfolios

Our approach to equities can be broken down into two components: Core individual stocks and Factor-based Exchange Traded Funds (ETFs).

For the Core equity component of our portfolios, we gain broad exposure to stocks with long term competitive barriers that are purchased and rebalanced based on a price-to-fair value methodology. We purchase multiple sources of subscription-only research that provides discounted cash flow business valuation research to identified companies with defensible businesses that are trading at reasonable prices. Companies with sustainable competitive barriers have the capability to earn high Returns on Invested Capital or “economic profits” over the long term.

For the Factor component, We use Exchange Traded Funds (ETFs) that are structured and rebalanced based on Factor screens designed to capture long term risk premiums like actively managed funds but with low underlying costs like passive investments, combining the best of those two approaches.

Liability-driven asset allocation

Institutional investors plan for future portfolio liabilities or spending requirements. We believe individuals should do the same. Interest rates are at secular lows and will likely remain that way due to structural forces like exponential advances in computing power that are having a demonetizing effect on our lives. Because of ultra-low interest rates, the traditional 60/40 stock/bond portfolio will be challenged in meeting future return requirements. Thus, the planning process for households is extremely important. We help clients model their future portfolio liabilities or portfolio spending requirements designed to meet their desired lifestyle over social security, pension, and other income. We then match those liabilities with conservative investments and build equities and other alternatives around those liabilities.