Asset Allocation

Asset Allocation

Choosing the most appropriate assets – and the most appropriate mix of those assets – is crucial to your investing success.

Of course, other choices come into play. For example, the managers we select for your portfolio will affect its performance. But far more important is determining how much of your portfolio to devote to equities; within equities, how much to international stocks, how much to larger companies, how much to smaller ones and so on.

Thus, we spend considerable time and effort selecting, managing and adjusting asset allocation. Only then do we take the next step: selecting the appropriate investment vehicle for each portfolio component – whether that vehicle is a dedicated separate account manager, an unregistered pooled investment, a mutual fund, an exchanged traded fund or some other type of security.

Active Management
In addition to determining an asset allocation designed to meet your specific goals, we actively manage your portfolio. Thus, as market circumstances and our views change, we revise your portfolio’s asset allocation appropriately.

In addition, we also will “rebalance” your portfolio to adjust, for example, an asset that has outperformed expectations, and so has come to represent a greater portion of your holdings than we have determined to be appropriate.

Alpine employs three levels of active management.

Level One – Policy. We choose the asset classes to be used in the portfolios we manage. Each is selected to provide specific anticipated return, risk and correlation attributes.

Level Two – Tactical Decisions. Based on our “level one” decisions, we develop a portfolio containing target allocations designed to maximize the likelihood of achieving a defined goal.

We regularly review and, as necessary, adjust these portfolios, based on our view of the financial markets and the macroeconomic environment.

Because assets will likely earn more or less than originally forecasted, over time, a portfolio’s actual mix will drift from its target mix. In addition, values may fluctuate dramatically as a result of causes we judge to be temporary. When this occurs, we rebalance the portfolio within predetermined ranges to offset these temporary changes. This provides the opportunity to earn more than we would by sitting on the sidelines through such periods.

Level Three – Investment Vehicle Choice. In implementing our asset allocation, we seek the cheapest, most efficiently managed vehicles. We consider factors such as liquidity, transaction costs, potential tax consequences and fees.

We seek to diversify across active managers unless they themselves hold widely diversified positions. We use quantitative tools to allocate across different vehicles, balancing anticipated returns with the potential of holding too much of a particular type of investment or assuming significant exposure to particular constellations of events.