Investment Philosophy

Our clients generally have focused objectives to preserve and build wealth over time. This conservative approach has guided our asset selection and allocations at every step of the portfolio creation process. Additionally, we are acutely aware that it can take a lifetime to accumulate wealth but only a short period of time to destroy it. As such, in every investment strategy, we create portfolios with the following principles in mind:

A client’s income needs and risk tolerance are the primary drivers of the asset allocation selection process. This conservative approach to portfolio construction attempts to mitigate the following crucial variables: lifestyle fulfillment, and outliving one’s assets. Simplicity in portfolio design and construction is paramount.

Using index exchange traded funds (ETFs) in the equity asset classes mitigates the risk of underperforming the relevant benchmarks. Observing that 90% of equity mutual fund managers underperform their respective benchmarks, we feel it prudent to match those benchmark returns; not attempt to beat them. In addition, because of their unique structure, ETFs have far better tax efficiency when compared to either mutual funds or separately managed accounts. They allow shareholders to defer most and possibly all capital gains until shares are sold. In our view, tax efficiency will only become more important in the future.

One of the few certainties with financial markets is that they move in cycles. We seek to capitalize on these cycles through a disciplined asset allocation rebalancing process. This process allows us to sell relatively overpriced assets and purchase relatively underpriced assets in a methodical fashion. Our cutting edge portfolios are supported by research sources such as: Schwab Institutional, Argus, Reuters, Morgan Stanley, Credit Suisse, and Morningstar.

Significant value can be added through active fixed income management. By matching client portfolio duration and risk tolerance with individual bond selection, we are able to more accurately gauge portfolio cash flow and risk metrics. For consideration into client investment portfolios, every investment that is considered must possess two important characteristics: (1) daily liquidity, and (2) fully transparent. This aversion to illiquid, opaque investments (e.g. hedge funds or private equity) ensures that our clients’ capital is accessible at any point in time. In addition, clients and Gratus Capital Management know exactly what we are invested in at all times. This negates the possibility of situations similar to a Madoff Investments occurring.