Managed Accounts
1. Investment Planning:
Understanding you, your investment goals and the level of portfolio volatility you can tolerate given your time horizon and specific goals.
2. Asset Allocation:
We use the information from the planning stage and sophisticated construction techniques to target mix of assets that best fits your goals.
3. Manager Selection:
We screen and select the investment vehicles for your portfolio to maximize your performance.
4. Performance Reporting:
We provide you with regular reports to monitor your portfolio performance and adjust and adapt when required.
Planning
Investing is not an end in itself.
Prudens realizes that Investing is a means to an end rather than an end in itself. We have the know-how and experience to help structure an investment plan around what matters most to you. Prudens can help you evaluate your objectives, resources and risk appetite in order to craft a winning investment plan.
There are no one-size-fits-all solutions in investing. Achieving the right mix of return and risk in an investment plan is crucial to ensuring that a client meets their objectives and is able to stick to the plan during down markets. Prudens works with our clients to discover just how much portfolio volatility they can tolerate. We also incorporate the timing of any expected cash flows so that our client’s have the liquidity they need when they need it.
Asset Allocation
The first, and arguably most important, step to executing your investment plan is deciding how much of your money to devote to a particular asset class.
With the exception of the decision of how much investment risk to take, your asset allocation will determine your results more than any other decision.
Prudens employs industry leading research to target the allocation of its clients’ assets that will minimize holding period risk. Our models use over 200 years of market and economic data combined with investor risk tolerances to guide our determinations of portfolio allocations to major asset classes. This asset allocation process then dove-tails into the next phase of portfolio construction, Manager Selection, by employing optimization techniques driven by proven statistic research that maximizes the model’s predictive success.
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Click on image to enlarge
Manager Selection
At Prudens we carefully select the managed funds in which to invest client money.
No one company boasts the best managers for every asset class or market. Prudens scours the investment world to locate and identify those managers that exhibit the most skill at achieving success in their chosen markets. These managers are then deployed within a clients asset allocation framework using portfolio optimization techniques.
We select funds with consistent, measurable net-of-fee returns in excess of published passive benchmarks. Below are some of the key statistics we look at when selecting a fund.
- Minimum 3 year track record: We’re not interested in experimenting with your money. We require our managers to have a least 3 years return history.
- Minimum $50 million AUM: Running an investment fund is not cheap and entails a considerable amount of fixed expenses. Without enough assets, these fixed expenses can translate into outsized fees to investors.
- Information Ratio: This statistic is simply the average fund return in excess of the fund’s benchmark divided by the volatility of that excess. Fund’s that consistently beat their benchmarks will have a higher Information Ratio than those that don’t.
- Up-Capture: This statistic measures how much positive benchmark performance was captured by the fund manager. It’s important to know if a manager’s excess returns resulted from capitalizing on up-markets, or simply holding lots of cash.
- Down-Capture: This statistic measures how much negative benchmark performance was captured by the fund manager. While it’s important for a manager to perform well in good market cycles, it is just as important for them not to give it all away in down markets.
- Analyst Ratings: It’s never a bad idea to get a second opinion. That’s why we consider fund ratings from third party analysts. These analyses can point to issues with a manager’s operations that may call into question future performance.
- Personal Investment: It’s important that manager’s invest significant amounts of their own money in the funds they manage. It’s just common sense that managers should have some “skin in the game,” as the saying goes.
- Minimum Average Tenure: Average tenure is the average length of time all of the management team of a particular fund have been managing the fund. If Average Tenure is too short then the fund’s historical performance likely won’t be the same in the future.
Even with all this analysis, there are no guarantees that a particular fund will out-perform its benchmark going forward. That’s why it’s important to build properly allocated portfolios with multiple managers in order to diversify “selection risk.” We won’t be right every time but, with careful analysis, we can slant the odds of winning in our client’s favor.
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Turn-Key Portfolios
Our turn-key portfolio solutions allow Prudens to provide institutional quality investment allocation to clients without charging institutional level fees.
Prudens offers turn-key diversified portfolios for clients with a wide variety of risk appetites and holding periods. Prudens utilizes a holding-period risk/return model combined with more traditional mean-variance optimization to build a set of portfolios that minimizes investment risk. We re-examine these allocations annually to adjust for changing investment correlations while maintaining agnostic return differentials for specific investments within major asset classes.
"To observe how people of prudence, discretion and intelligence manage their own affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable income, as well as the probable safety of the capital to be invested.”
The Prudent Rule