How We Invest
Tax‑smart portfolio strategies with clear guardrails,
liquidity discipline, and a spending runway.
Markets change. Your goals do, too. What shouldn’t change is the discipline driving your portfolio strategy. Here we provide an overview or our portfolios and their implementation and ongoing management.
Rather than reacting to or attempting to predict short-term market moves, we seek to align portfolios with your financial plan and to manage risk with intention. We emphasize broad, diversified exposures, sensible tilts (e.g., quality/profitability, value, and momentum), rebalancing inside defined guardrails, and tax-smart execution.
For retirement spending, we use a bond‑first withdrawal approach that creates a multi‑year “runway,” helping support distributions during equity downturns. The sections below outline our framework, model ranges, liquidity policy for interval/private strategies, and the evidence‑based triggers that may result in allocation changes.
Our Framework
We organize assets into three roles that work together across markets: Preservation for stability and income, Diversifying for different return drivers, and Appreciation for long‑term growth.
- Appreciation Assets: Appreciation Assets are intended to drive long-term growth. These assets are expected to experience meaningful volatility and are held with a long time horizon in mind. Appreciation assets play the central role in compounding wealth over time. Examples of Appreciation Assets include public equities, public real estate, and private equity.
- Diversifying Assets: Diversifying assets or strategies are intended to provide distinct and positive sources of return that differ from traditional stocks and bonds, seeking to improve portfolio level risk and return across a wider range of economic scenarios. Examples include market neutral, long/short, trend following, private real estate, or hybrid strategies.
- Preservation Assets: Preservation assets are intended to collectively provide stability, resilience, and income. While individual holdings within this category may vary in volatility, the role of Preservation is to dampen overall portfolio fluctuations, support liquidity needs, and provide a reliable source of cash flow across a range of market environments. These assets help ensure that portfolios can withstand periods of stress.
Strategy Overview
Appreciation Assets primarily drive portfolio risk and drawdowns. We highlight each strategy’s baseline allocation, Appreciation range, expected volatility, and a representative benchmark’s maximum decline (not actual portfolio results). Ranges keep risk intentional. Client portfolios are customized in their application based on account type, tax considerations, and other client-specific matters.
True Wealth Portfolio Strategies:
| Strategy | Base: Appr / Div / Pres | Appreciation Range | Volatility Range | Benchmark Max Decline |
|---|---|---|---|---|
| True Wealth 02 | 20 / 0 / 80 | 15–25% | 4–7% | -16.84% |
| True Wealth 04 | 35 / 0 / 65 | 30–40% | 5–8% | -18.93% |
| True Wealth 05 | 45 / 0 / 55 | 40–50% | 7–10% | -24.41% |
| True Wealth 06 | 55 / 0 / 45 | 50–60% | 8–11% | -29.69% |
| True Wealth 07 | 65 / 0 / 35 | 60–70% | 9–12% | -34.86% |
| True Wealth 08 | 75 / 0 / 25 | 70–80% | 11–14% | -39.85% |
| True Wealth 10 | 90 / 0 / 10 | 80–100% | 14–17% | -46.94% |
| Appreciation Only | 100 / 0 / 0 | 100% | 14-18% | -51.40% |
| Preservation Only | 0 / 0 / 100 | 0% | 3-6% | -17.14% |
Note: Benchmarks for each portfolio strategy use the base strategy allocations and the iShares MSCI ACWI ETF (ACWI) and Core U.S. Aggregate Bond ETF (AGG). Max Declines are illustrated using these two ETFs, beginning 04/2008, and are in the periods 09/2021-09/2022 (Preservation Only; TW 02 benchmark) and 05/2008-02/2009 (all other benchmarks). Expected volatility bands are based on history, not guarantees.
Letters
Liquidity Policy
We may use certain private investments or interval funds with limited liquidity to pursue enhanced diversification and returns subject to the following caps.
- Caps: up to 25% for standard portfolios, up to 35% on an exception basis for high-net-worth clientele with long time horizons, 0% for small portfolios.
- Why it matters: to have enough access to cash to fund spending and portfolio rebalancing without relying on distributions from these less liquid vehicles.
Spending Runway
Clients taking regular portfolio withdrawals to meet their spending needs require additional considerations. Beyond aligning risk and return to your plan, we use a bond‑first withdrawal strategy to create a spending runway. That runway funds spending while equities recover.
- Liquidity Runway: (Daily‑liquid Preservation Asset market value) ÷ (Planned annual withdrawals).
- Preservation Asset Runway: (Preservation Asset market value + Expected income return) ÷ (Planned annual withdrawals.)
Rebalancing & Taxes
- Rebalancing: Portfolios reviewed daily and performed as needed in accordance with rules‑based bands around assets classes and individual holdings; accentuated in times of volatility.
- Tax work: Household-level and not account-level portfolio management to capitalize on asset location benefits. Portfolios reviewed daily for tax loss harvesting subject to specified thresholds and availability of suitable substitute investments. Withdrawal sourcing from various account types — taxable, tax deferred, tax free — in accordance with a client’s financial and tax planning and yearly income & tax rate targets.
What Causes Change
- Changing risk and return expectations.
- Change in shape of the yield curve.
- Change in credit spreads (compensation for taking credit risk).
- Changing liquidity traits.
- Positions breaching risk‑contribution limits.
- Headlines alone are not a reason to change long‑term allocations.
FAQs
- Where does my “cash reserve” live?
In your bank accounts outside the portfolio. A target is set for each client based on quantitative analysis and qualitative preferences. The portfolio provides additional, multi‑year runway. - Do you forecast investment returns?
We review medium to long-term capital market assumptions from multiple independent institutional sources and evaluate a range of plausible scenarios. While we may modestly overweight or underweight certain investments, our goal is to build an “all-weather” portfolio — diversified and disciplined — designed to perform across different environments, not optimized for a single forecast.
- How often do you change the portfolio?
We review portfolios for rebalancing opportunities daily. We adjust the portfolio strategies when a different asset class combination or holding change meaningfully improves risk or return expectations, historically 0-3 times per year. We do not believe in mistaking activity for control. Clients often change between portfolio strategies over time, based on their financial planning and risk preferences. - What if markets fall sharply?
Your runway lets us fund distributions from Preservation Assets while we may rebalance into and avoid selling depressed equities. Rebalancing tends to be a “buy low, sell high” forcing mechanism. Staying invested and disciplined matters most. - Why use interval or private funds?
To access assets classes with expected diversification and return benefits that may not be available in or delivered as efficiently in public markets. We size them within our guardrails and monitor the investment and its expected capital contributions, distributions, and liquidity windows. - Why use Diversifying Assets? Because thoughtful usage may improve portfolio resiliency. Sometimes stocks and bonds fall together (think 2022, when both were down double digits). Diversifying Assets we may utilize have unique sources of return that tend to behave differently, which may improve portfolio diversification and return expectations.
- Do you use an Investment Policy Statement (IPS)?
We don’t require a long, formal IPS. We maintain clear strategy guardrails, a household liquidity policy, and a concise written investment snapshot in meeting materials. A formal IPS is only required for ERISA plans.