In my last blog dated Feb. 15, 2021, "What if Your Advisor Can't Find You?", I introduced the PIM platform, “Private Investment Management”. This platform allows us to manage accounts on a discretionary basis. Hence, PIM enables clients to benefit from tactical asset allocation and can be suitable for those who may at times be difficult to reach or are simply not inclined to manage individual holdings themselves.
Our PIM portfolio managers aim to manage risk tactically for clients. We can reduce the equity weighting in our PIM accounts when we see rising risks and increase our equity weighting when we believe an upward trend is to resume. There is tremendous operational efficiency as all accounts follow a portfolio model that enables timely rotations and bulk trading when deemed necessary. For example, last year, most cyclical sectors were penalized due to the contracting economy, and we were able to promptly rotate investments to “work-from-home” benefactors that were less influenced by macro-economic factors.
Clients that have attended our webinars in January and February will remember that we feel 2021 will be different from last year. Because of the arrival of vaccines, the market now anticipates a faster economic recovery and higher interest rates. In this scenario, value and cyclical stocks that are more economically sensitive should start to outperform. Thus far, we have already implemented this view into our PIM models and have balanced our growth holdings (e.g. technology) with value/cyclical stocks (financials, energy, industrials). We have seen this balanced approach work well, as the double-digit returns from cyclical holdings have offset the lagging performance of growth and technology.
I have received numerous questions since my last blog. One question centers on how we adjust the portfolios for people with different risk profiles. The two tables below represent two different risk profiles. The first one with 65% equity and 35% fixed income, is designed for more conservative investors. We can adjust the equity weighting anywhere between 35% equity to 85% equity, depending on the investment environment. For clients that would like to be more aggressive, the second table depicts a different range, where we can adjust the equity weighting anywhere between 50% to 100%. Therefore, although the individual holdings are similar for all PIM clients, the proportion of stock, bonds, cash, and alternative investments allow each account to be customized to fit different tolerances of risk.
65%/35% Target Mix
95%/5% Target Mix
Our PIM portfolio managers endeavor to diligently track markets in hopes of taking advantage of any change in sentiment or market fundamentals. For those clients who are inclined towards a more hands-off approach, the PIM account can be considered. Please contact us if you would like to find out more about our PIM strategy.