BenchmarkPlus – a whole-portfolio solution in a single strategy
The BenchmarkPlus strategy often forms the core of a client’s investment
plan. In a single portfolio,
BenchmarkPlus provides the following potential benefits:
- Participation in stock and bond market returns,
calibrated to the client’s personal return objectives and
risk tolerance. - Sophisticated asset allocation.
- Rigorous, multi-level risk management.
- Growth from equity capital appreciation.
- Inflation protection through stock market exposure.
- Current income from portfolio dividends and interest.
- Flexibility to choose between US and global benchmarks.
- Cost-effective and tax-efficient portfolio management.
- Maximum liquidity – portfolios generally can be converted to cash within three business days.
BenchmarkPlus offers clients a range of portfolio choices, each reflecting a specific risk/return combination, as illustrated below.
Each BenchmarkPlus version may be implemented with either a US or a global
focus. Gould investment professionals work closely with clients to select the
implementation that best reflects their return goals and risk tolerance.
BenchmarkPlus portfolios are constructed from a broad universe of 12-15 distinct asset classes, including US and international stocks and bonds, precious metals, commodities, real estate and specific industrial sectors. Each asset class is implemented using low-cost, tax-efficient index or index-like mutual funds, including exchange-traded funds (ETFs).
The chart below shows sample allocations for BenchmarkPlus – Moderate and BenchmarkPlus Global – Moderate portfolios. Note that the sample BenchmarkPlus – Moderate portfolio contains some international exposure, but the sample BenchmarkPlus Global – Moderate portfolio naturally has much greater exposure to international assets.
Our quarterly rebalancing process employs two important levels of risk
management in constructing
BenchmarkPlus portfolios.
Benchmark Flexibility – Overall market risk levels vary considerably
over time, often causing undesirable swings in the risk of a fixed stock-bond
allocation. To address this challenge, we allow the portfolio benchmark
to vary within a defined range in response to changing market risk levels.
The chart below illustrates this process. Note how the proportion of
the benchmark allocated to stocks tends to move inversely to our estimate
of market risk. In effect, we seek to “lean into the wind,” with the
goal being to add stability to portfolio risk levels over time.
Portfolio Optimization – Through portfolio optimization, we update the target asset allocation for client portfolios. Optimization seeks to identify “efficient” portfolio combinations, that is, asset allocations that represent the minimum amount of risk for a given level of expected return. Optimization also enables us to make informed decisions about the tradeoff between return and risk at various points in time.
In summary, the BenchmarkPlus strategy seeks to provide clients with a balanced and diversified portfolio, implemented in a disciplined manner, with rigorous attention to risk management.
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BenchmarkPlus Overview