Investment Committee Update
Earlier this week, the FinTrust Investment Committee held its quarterly meeting to review the model holdings and discuss the investment landscape. After reviewing each holding compared to its respective peers and benchmark, the Committee determined that both the models and their holdings are well positioned and that no changes were warranted at this time.
The committee went on to recognize that while some of the individual holdings were lagging their peer group, the models as a whole were exceeding our expectations and outperforming their benchmark before fees and taxes.
What criteria does the Investment Committee review for the model funds and ETF’s?
We use a wide array of criteria when analyzing our holdings. One of the initial items we look at is the risk/reward profile and return compared to benchmark category for each investment. In very short order, this allows us to see if an investment is being rewarded for the risk it is assuming. We then move on and look at other criteria such as manager tenure, duration, yield, asset correlation, alpha and standard deviation.
You mentioned that some holding are lagging their peer group. Tell us more about that.
Certainly. Not every investment will be a winner. As noted above, we scrutinize our holdings carefully and we maintain a watch list for holdings that are not performing as we expect. One quarter does not make or break an
investment, so we use the watch list as our way of more closely monitoring a holding. This will include further research into the holding and sometimes contacting the mutual fund or ETF directly to get a fist-hand account of what is occurring.
What does the typical model portfolio look like?
We consider ourselves allocators, so our models are well diversified. Currently, our model portfolio consists of 18 different Morningstar categories. Some of these are more traditional categories such as Large Growth and Intermediate-Term Bond, while others are more tactical, such as Bank Loan and Long/Short Equity. We firmly believe that diversification is the key to achieving consistent returns at the lowest risk possible in the marketplace.