Effective portfolio construction looks at the whole and seeks to reduce risk for a given objective and allocation. Done right, this requires an understanding of the characteristics and correlation of the constituent pieces. The process is often complicated by the reality of legacy holdings.
Logia’s Outsourced CIO Program includes portfolio construction services and strategies that serve a range of possible client situations.
Standard Models – Approved managers from the product selection assemble efficient portfolios. Rather than simply fulfilling each asset class with a selected manager independent of others, we analyze the managers in combination to avoid unintended concentrations and achieve more effective diversification.
Manufactured Beta – This entails the option of a core equity component that tracks the Domestic Large Cap Universe with no embedded management expense. This means that a significant portion of the portfolio may be achieved at a lower cost than index funds or ETFs. This provides the ability to customize the overall client portfolio around unique circumstances, including transitions, legacy holdings, and concentrated positions, or as the basis for a core/satellite strategy. It can also be leveraged to manage taxes for the overall portfolio.
Transition Management –We work with each client situation to customize a plan intended to manage trading expenses and tax consequences, while transitioning the portfolio to its intended target.
Concentrated Positions – A common challenge for advisors is the treatment of a legacy position in a low basis concentrated holding. This may be the result of inherited stock or accumulated positions by corporate executives. We work with the advisor to develop a deliberate plan for reducing risk by diversifying around and eventually away from the position, while managing tax implications.
Core/Satellite Strategies – Core satellite portfolios can be an effective approach to achieving active risk on a cost-efficient basis. We have the capability to assist with the creation of customized mandates including core/satellite strategies using manufactured beta as the core, and any number of higher active risk strategies as the satellites.