Active Risk Management
It is a broadly accepted investment principle that asset allocation is the key determinant of the amount of return a portfolio may expect to achieve, and the level of risk (as measured by volatility) a portfolio will have. Therefore, Logia takes great care to establish the appropriate asset allocation for its clients.
Each client’s asset allocation is constructed based on the client’s risk tolerance and risk capacity. Risk tolerance is a subjective measure of the client’s attitude about risk, and appetite for volatility in their portfolio. Risk capacity is a more objective measure of the client’s ability to withstand volatility in their portfolio and still pursue their cash flow needs.
As importantly, Logia monitors each client account regularly to measure the dispersion of the portfolio from its target that naturally occurs from market movements and cash flows. To maintain an appropriate level of risk, Logia will rebalance each client portfolio when dispersion is beyond an acceptable level. For taxable investors, realignment is done with an eye toward minimizing tax implications.