Our Portfolio Construction is comprised of investment models that include allocations from these broad investment categories.
Our Growth Model uses individual equity securities and Exchange Traded Funds (ETFs) as its primary investment vehicles. The SkyOak Wealth Growth model can contain up to 99% invested in equities. Primary emphasis is placed on achieving long-term growth and capital appreciation. This model is designed for investors with a higher risk tolerance, longer investment timeframes and an understanding of the higher relative risks that comes with equity investing. The Growth model currently applies three different strategies simultaneously. The base is built around “Core” holdings which are equities and where we use a mean regression based strategy. The second is momentum-based which focuses on market sectors which are expected to outperform the broader market. And the final strategy is a dividend based strategy that focuses on companies who have a history of steadily paying and also increasing their dividends.
Our Blend Model uses individual equity securities, ETFs, and fixed income securities as its primary investment vehicles. The Blend Model can be invested up to 66% in equities, and 33% in income-producing securities. The dual emphasis here is placed on both capital appreciation and the generation of current income. This model is meant for investors with an understanding of the risks that come with equities and but tempered a balanced income strategy. The investor can expect the income allocation to provide a stream of current income, as well as growth. Like our Growth Model, the Blend Model also applies the same three equity strategies. In addition, it layers on a fixed income component as well.
Our Dividend Model uses individual equity securities and dividend-focused ETFs as its primary investment vehicles. Assets are invested in securities with a history of both paying dividends and a history of increasing their dividend payments. We screen our dividend investments through a series of filters and use the investments that pass all of our internal tests. The emphasis is placed on generating dividend income but comes with associated equity and interest rate risks.
Our Income Model uses individual equity securities, ETFs, and fixed income securities as its primary investment vehicles. The Income Model can be invested in up to 33% equities, and 66% income producing securities. Emphasis is placed on the generation of current income with a secondary focus on moderate capital appreciation. This model is meant for investors whose personal financial plan require current income, a higher degree of safety and lower degree of volatility. Income Investors should understand the risk of equities as well as fixed income. Like our Growth Model, the Income Model also applies the same three equity strategies, with slightly lower exposures. The Income Model also layers on a fixed income strategy similar to the Blend Model.
Our Stable Model uses individual bonds, Exchange Traded Funds, dividend equities and/or other fixed-income alternatives as its primary investment vehicles. The Stable Model can be invested up to 100% in income-producing securities and cash equivalents. Emphasis is placed on the generation of current income and capital protection. There is no focus on capital growth. This model is designed for investors with a low-risk tolerance and the need to produce income. The Stable model is allocated with only securities that fit its objective of safety and income.
Active Asset Allocation: Trading and Rebalancing
As part of our ongoing asset management oversight services, we are constantly monitoring and adjusting allocations based on our market forecast and the relative performance of each underlying asset class.