Investment Philosophy Statement

Passive/Active Size, Style, Sector

Global Balanced Macro

This methodology seeks to provide a consistent, risk adjusted total return that outperforms the pre-determined benchmark based on the specific portfolio strategy as the engine of the private client wealth management, investment planning and retirement experience. Portfolio construction is accomplished through extensive screening of Exchange Traded Funds, Mutual Funds and Closed End Funds (Pooled Investment Vehicles) for relative strength and strong historical risk adjusted return over the past 1, 3, and 5-year time frames. Individual issues are generally avoided for portfolios below $3,000,000 in order to help control risk and focus on the global macro issues that drive markets. Individual issues may be used for a small portion of holdings for portfolios over $3,000,000. These Pooled Investment Vehicles (PIV) are arranged into fully diversified risk appropriate portfolios for each client for taxable, tax exempt, and tax deferred accounts as required.

The active element of the strategy refers to the process of over/underweighting certain levers within both the equity and fixed income components of the risk appropriate portfolio allocation. With respect to the equity allocation, the Size, Style, Sector components are the management levers we seek to optimize. With respect to fixed income, active levers are currency, duration, credit, leverage and the deployment of bond proxies such as Convertibles, and Real Estate Investment Trusts. We seek to incorporate this methodology grounded in the theoretical Finance concept of the Markowitz “efficient portfolio”.  The characteristic of an efficient portfolio is one that provides maximum expected returns for a given level of risk. We believe this is the best approach when compared to strategies that are under diversified and/or over traded. This process is consistent with an investment time horizon of 3 to 5 years.

This portfolio strategy makes use of historical performance data with full Modern Portfolio Analysis including R Squared, Standard Deviation, Alpha and Beta statistics. Since the Investment Planning process utilizes forward looking capital market assumptions which are tied to the size, style, sector components of the equity market we believe this process can be effectively utilized to pursue investor objectives for risk adverse clients in each risk category from Conservative to Aggressive. We build into our assumptions that amongst the most insidious risks for the long term investor or endowment is purchasing power risk represented by the measure of inflation.

We anticipate infrequent use of tactical decision making, though there have been times such as 2008 when tactical decisions have been warranted. Aggressive tax loss harvesting is used when appropriate losses can be deployed effectively against long-term gains, as substitutions are readily available for each component of the portfolio allocation.

Communication with clients is ongoing and frequent. In addition to monthly statements, clients receive a personalized quarterly performance evaluation. The evaluation reviews asset allocation and highlights current and past account performance in light of stated guidelines and provides relevant benchmarks against which the client may further measure relative performance. In addition, the quarterly evaluation provides a risk adjusted graphic depiction of performance since inception. Investment performance and the investment plan will be reviewed annually to determine continued feasibility of achieving the client objectives established within the plan.


Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. As each Private Investment Management (PIM®) program account is individually managed, construction and ongoing management of portfolios may vary from those discussed in this Philosophy Statement.

Past performance is not indicative of future results, and there is no assurance that any investment strategy will be successful.

Investments and investment strategies contained herein are provided for informational purposes only. We would need to review your individual situation before recommending appropriate strategies to you. All investing involves risk, including the possible loss of principal. Mutual Funds and ETFs are subject to risks similar to those of stocks and may yield investment results that, before expenses, generally correspond to the price and yield of a particular index. There is no assurance that the price and yield performance of the index can be fully matched. Each asset class has its own risk and return characteristics. The level of risk associated with a particular investment or asset class generally correlates with the level of return the investment or asset class might achieve. Closed-End Funds are actively managed and can employ a number of investment strategies in pursuit of the fund’s objectives. Some strategies may increase the overall risk of the fund and there is no assurance that any investment strategy will be successful or that the fund will achieve its intended objective. Closed-end funds are subject to different risks, volatility, fees and expenses.

The PIM program is not designed for excessively traded or inactive accounts and are not suitable for all investors. Please carefully review the Wells Fargo Advisors advisory disclosure document for a full description of our services. The minimum account size for this program is $50,000.

Standard deviation: is the measure of variability of return earned by an investment portfolio. Generally, the larger the standard deviation, the greater the risk taken to achieve the return.

Alpha: is a measure of risk-adjusted performance versus the noted benchmark.

Beta: is a measure of the relative volatility of a stock or other security as compared to the volatility of the noted benchmark. The leverage ratio shown is calculated based on the leverage utilized by a Master Fund or, to the extent that a Master Fund invests in other funds, the underlying funds in which the Master Fund invests.

R-Squared: A statistical measure of a portfolio’s correlation to a benchmark. A low R-squared indicates that the model’s movements are not well explained by movements in the benchmark.

Investment and Insurance Products are:
*Not insured by the FDIC or Any Federal Government Agency
*Not a Deposit or Other Obligation of or Guaranteed by, the Bank or Any Bank Affiliate
*Subject to Investment Risks, Including Possible Loss of the Principal Amount Invested

Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC, Member SIPC.

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