The Managed Asset Allocation (MAA) strategy is an extension of the core methodology employed in our TAA product. The product takes a longer term strategic approach by considering numerous asset classes across the full spectrum of risk and return. The asset classes could include, for example Treasury bills, corporate bonds, large and small cap stocks, international securities, real estate investment trusts, etc. Through an interactive process with our clients, we review multiple potential risk and return scenarios for the portfolio and establish strategic targets for each asset class selected. In addition we include the TAA product as the core holding of the portfolio.

The decision to determine the proportions allocated to each asset class is, as with TAA, driven by our proprietary mathematical model which takes into account investment value, risk and importantly, the correlation of one asset class with another. A key determinant of portfolio risk is not only the mix of asset classes but the degree to which they are correlated. Assets that are not highly correlated, that is move in opposite directions, have a powerful diversifying affect on lowering the risk level of the total portfolio. The characteristics of the asset classes combined with the client’s risk tolerance enable us to determine the appropriate strategic targets for each asset class.

Implementation of the strategy involves utilizing no-load, low cost index-style mutual funds or collective investment funds that closely replicate the composition of the markets we seek to enter. Such funds give us the ability to move efficiently into and out of the strategic asset classes held in the portfolio. The strategic targets are typically reviewed on a semi- annual basis but the TAA weights are reviewed monthly. Modification to the TAA positions will allow us to move the portfolio to greater or lesser stock weightings as a function of the undervaluation(overvaluation) of those markets. Thus the portfolio is managed in a dynamic fashion while maintaining long- term strategic risk and return goals.