SCI Passive ETF Allocation

Not looking for an actively managed asset allocation strategy?

Check out our Passive ETF Strategy

3 Asset Allocation Models
Quarterly Re-Balance
Non-transaction fee ETF’s
Managed policy allocations

All of the benefits of asset allocation, using passive investments for low platform costs.

Includes professionally managed policy allocations responding to the current changes in the long term outlook for global markets and economies.

Model Allocations

 

Fixed Income Investments

Global and domestic exposure with some inflation-protection.

US Equity Investments

Focused in small, mid and large caps.

Foriegn Equity Investments

Concentrations in Japan, Europe and China.

Alternative Investments

Primarily real estate, alt exposure may vary depending on market environment.

Conservative

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Moderate

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Aggressive

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Considering
Active vs Passive
Strategies

First thing’s first… ALL mutual funds and exchange-traded funds (ETFs) are managed to some degree.

 

The question becomes: to what extent do you want your assets to be managed?

 

ACTIVE MANAGEMENT

Do you want to invest with fund managers who will buy and sell stocks within the fund, attempting to allocate more assets into the investments that rise and less assets into the ones that fall? This is the essence active management.

 

  • Active managers view markets as inefficient. They pursue excess returns in addition to the expected return of the markets.
  • Requires manager skills to know the right times to buy and sell.
  • These managers charge management fees for their active management services.
  • Technology is taking greater control of the actively managed investment process.

PASSIVE MANAGEMENT

Or would you prefer to invest with a fund manager who will make few or no transactions, charge you lower fees and simply track major market indexes in an effort to match thier performance. This would describe passive management.

 

  • Passive managers view markets as efficient. They believe that seeking alpha beyond market returns is a waste of resources.
  • Some data suggests that, on the whole, passive management is the more consistent option for investors.
  • Passively managed funds typically charge lower fees than actively managed funds.

 So…let’s make a choice:

Do you view markets as efficient or inefficient?

If you feel that markets operate efficiently and the investment returns that result are the best you can expect, stop right there. Passive management might be the choice for you.

However, if you feel there is excess alpha to be gained on top of the returns the market will generate, then maybe active management strategies should be considered.

Choosing the active management path, you need to be able to select the top active managers. Consider that all active managers averaged returns are about equal to passive market indexes. So, if you’re able to pick from the top active managers, you could realize above average returns.

An independent study of more than 70 major pension funds by Brinson, Singer and Beebower* indicated that asset allocation was the major factor affecting overall portfolio performance.

The research also indicated that more than 90% of your portfolio results are determined by the asset allocation decisions you make, while security selection, market timing and other factors account for less than 10% of your portfolio results. Whether you believe these numbers or not, it’s hard to argue that asset allocation plays a role in explaining the returns to a portfolio.

* 1986, Determinants of Portfolio Performance” by Gary P. Brinson, Randolph Hood and Gilbert L. Beebower

SCI Active Allocation Strategy

For investors interested in professionally managed asset allocations, strategically re-balanced quarterly, utilizing top activly managed mutual funds and non-transaction fee ETF’s.