Deciding Asset Allocation

SIMI typically uses a "balanced" approach to portfolio development, meaning that clients own a mix of stocks, bonds, and various "alternative investments" such as Real Estate Investment Trusts (REITs) and commodity-type funds. Our quarterly review of each account's asset mix may result in changes to the asset mix depending on changing asset class valuations. 

Diversification

We stress diversification as a key component of portfolio design. In stock portfolios, investments are typically diversified across major domestic and global economic sectors.  SIMI may augment individual security selection with managed index or exchange-traded funds. Diversification substantially reduces the likelihood of major portfolio swings beyond the securities markets' normal fluctuations.

Fixed Mix 

In our fixed mix program, the client and portfolio managers agree on a specific fixed asset mix between stocks, bonds and cash. The portfolio is then rebalanced to that pre-determined asset mix each quarter. This approach steers a steady course through often-turbulent market conditions and ensures that clients will "buy low and sell high" through market cycles.

Clients choosing this approach may determine their own desired asset mix or may choose one of SIMI's three standard asset mixes presented below:

Tactical Asset Allocation

The selection of an appropriate current asset mix, and the decision to increase or decrease exposure to one asset class relative to another as market valuations change is called tactical asset allocation. Based on the risk/reward tradeoffs between broad asset classes and client-specific considerations, SIMI manages the asset mix decision for clients choosing this approach. It is especially suited to investors willing to act in a contrarian fashion as markets move through periods of excessive optimism and pessimism.