Managing Risk
Without
Sacrificing Return
Sheets Smith offers a variety of risk adjusted strategies to help you achieve your financial goals. Our professional advisors will work closely with you to select the right approach for you.
Absolute Return Balanced
Flagship Strategy
We believe the Absolute Return Balanced methodology is an optimal balance between risk and return for the majority of investors. By far, most of our portfolios follow these investment guidelines. We offer the Absolute Return product to clients at brokerage houses with wrap fees as well as to non-wrap fee clients.
The asset mix of the Absolute Return product has averaged about 60% stocks, 30% bonds and 10% cash over many years. However, there have been periods when the portfolio has been essentially 100% stocks and others as little as 20% stocks. The change in the mix is usually gradual over time. These changes in the asset mix have been a primary driver of the performance of this product. The frequency of rebalancing depends on the relative value of stocks and returns available in fixed income investments. Cash may be a significant portion of these portfolios in turbulent market conditions. The performance and standard deviation of this portfolio should be compared to a hypothetical portfolio composed of 60% Standard & Poor’s 500 (or Russell 3000) and 40% Barclays Capital Government/Credit Index.
Strategy Categories
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Absolute Return Balanced Plus
This portfolio has averaged approximately 75% stocks and 25% fixed income and cash. It is more aggressive than the Absolute Return Balanced portfolio. The primary difference in this portfolio’s approach is that stock exposure will be greater most of the time and may reach 100% more often and for longer duration. This portfolio will simultaneously have lower exposure to fixed income investments but still retains the ability to include cash investments during adverse market conditions.
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Quantitative Equity
Consisting of equity and cash, the investment objective of this composite is to grow one’s wealth at an above average rate without taking undue risk. The latter part is difficult because ALL stocks involve risk. Each stock is usually equally weighted when it is initially purchased but this may be affected by the company size, liquidity, strength of fundamentals or price action. The strength of the economy and where the economic cycle is headed will have an effect on the number of stocks that are attractive at any given point in the cycle and, therefore, the number of issues and industry sectors vary over time. At times cash may be a large portion in these portfolios. Various ETF’s may also be used to get exposure to particular countries or commodities.
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Total Return
The portfolios using this approach have similar investment objectives as the Absolute Return Balanced Portfolio except the maximum percentage of stocks in these portfolios is limited to 75%. At times cash may be a large position in these portfolios.
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Conservative Balanced
The lowest risk SSIM balanced alternative. This composite consists of portfolios which have relatively conservative investment objectives. Managed similarly to our other tactical asset allocation portfolios except these accounts will have less exposure to stocks than the other portfolios mentioned above virtually all the time. These portfolios have a maximum exposure to stocks of 50%.