Broad diversification: Adapting a disciplined approach with ETF's and index funds, our core portfolio allocations allow an investor's participation in the market without the inherent risk of trying to predict the best stocks, time, or sector to be in to achieve a certain level of return.
Preventing Style Drift: Style drift can occur purposefully, when managers over or under weight specific sectors and/or stocks; or, it can occur accidentally, when a funds' allocation to a sector grows because of strong performance in that sector. Subsequently, the risk parameters associated with a portfolio can increase without any changes in the underlying investments. With ETF's and index funds, this specific risk is reduced due to the nature of these funds.
Lower Fees: Asset class investing using ETF's and index funds provides broad diversification with less cost. Studies show that 85% of active managers fail to outperform their benchmark yet these funds are typically associated with higher fees and potentially more risk.
Tax Efficient: ETF's and index funds offer a unique opportunity for investors to benefit from the vehicles' inherent tax efficiency while gaining exposure to a portfolio that is potentially more diversified. An ETF's structure makes them tax efficient as low turnover reduces any taxable events and the investment decisions of one investor does not affect another in the same portfolio as with the average fund.
At QSI, we implement a broad range of structured asset allocation strategies that cover a wide variety of investor goals and risk tolerances. We primarily use ETF's and Index funds when constructing core portfolios because we believe they provide the best, most efficient exposure to the asset classes and sub asset classes for our core portfolio strategies. We are not limited to any one provider but review the entire ETF universe for the best asset class representation, tax efficiency, liquidity and lowest cost.
Asset Class Investing: 94% of investment return is attributed to asset class. The philosophy of asset class investing is founded on the fact that future market performance is unknown. By building a core strategy utilizing asset class investing and our core approach, Financial Professionals and investors can manage through various market cycles and the life of the account with an efficient portfolio.
Effective Diversification: "Don't put your eggs in one basket" - A unique opportunity for investors to benefit from the inherent tax efficiency and low cost of ETF's while gaining a portfolio that is potentially more diversified and transparent.
Efficient Frontier: Generates optimal portfolios balancing risk and return utilizing principles of Modern Portfolio Theory as a foundation and then applying tactical management principles.
Customizing your Portfolio: IPS defines a strategy for allocation. Melds investor behavior characteristics with market dynamics to create an efficient portfolio that is designed as a core strategy for the life of an account.
Evaluating Risk & Return: Monitor investment strategies & manage expectations.