While other firms dance around this topic, Verde Capital Management’s advisors believe that the most important thing they can do for your family or business is make you money. Making money is one of our core competencies and we spend a large amount of our time educating and refining our strategies in the pursuit of ever better risk adjusted returns.
Asset management starts by measuring a clients risk tolerance. This gives us good insight into how much downside protection we need to put into a portfolio. In addition, we take direction from the financial plan on time-frames for different goals. Since the risk of many investments diminishes with the amount of time they are allowed to work, if a goal is relatively far off, we can be that much more opportunistic with our investment selection.
Although there is no way to completely eliminate downside in a portfolio Verde’s advisors are uniquely qualified to help in mitigating poor decision making in these areas. Most clients intuitively understand that the more risk in a portfolio the greater the long term reward. The reality today is that with the demise of pension plans, and social security, many clients will need to rely solely on their own savings efforts to enjoy a fruitful retirement. This is very difficult to achieve in a low rate of return environment. Clients today, need a high (equity style) rate of return in order to achieve their goals. Often, the most important thing Verde’s advisors provide is the clarity of thought and conviction that comes from years of experience investing in the stock market.
There is a preponderance of evidence that shows many investors sabotage themselves by making emotional decisions that tend to buy high and sell low. During these times it is important to have an advisor that can provide honest unbiased perspective which gives clients that clarity and conviction to stick to their investment strategy. Managing investor behavior is one of the most important things we do.
The investment plans that we create, use a variety of investment vehicles and asset classes in order to achieve our investment goals. We work with US stocks, international mutual funds, fixed income, commodities, real estate, private equity, and hedge funds to achieve our optimal asset allocation. Our asset allocation philosophy is inspired by the Yale and Harvard endowments. Yale’s portfolio manager David Swensen originally pioneered the idea that investments should be picked not only by their return characteristics but also by their inverse correlation to one another. This allows us to have a portfolio that is truly diversified where not everything moves in the same direction at the same time. Having more consistency and predictability in the rates of return gives our clients more confidence and allows for a smother investor experience.
Last, it is important to recognize that any investment portfolio, no matter how well constructed, needs to be able to change and adjust with our ever evolving investment climate. While other firms set a portfolio in place and forget it, Verde’s advisors meet with clients quarterly to review investment performance. Additionally our advisors travel across the country to meet with many of the mutual fund managers and companies to make sure that we are always knowledgable on any recent developments. Through in depth fundamental research that takes into account both a bottom up look into a companies earnings, as well as top down analysis of the economy at large, Verde believes its advisors have a sustainable competitive advantage in driving superior risk adjusted performance.