Dynamic Portfolio Management
We capture upside return and limit downside risk
We make investment decisions within the context of a long-term, historical perspective on markets. We believe the generational trends that span decades normally define the characteristics and underlying forces that determine market behavior in shorter time frames of a day, week, month or quarter. We also believe that understanding the characteristics and tendencies of asset classes over time is the basis for successful portfolio management.
We analyze the sequential relationships that exist among interest rates, bonds, stocks, currencies, commodities and business activity. We monitor these relationships using computer-intensive techniques that enable us to isolate opportunities for inclusion in a portfolio given the market environment and the client’s goals. These opportunities are ranked both among the asset classes and within the asset classes. Once we have determined the best asset allocation for the time, we then use our ranking within each asset class to determine the allocation among geographical regions, market sectors, industry groups and individual issues.
This quantitative process is not a black box where numbers go in and buy/sell decisions come out. The approach allows us to organize vast quantities of data and inputs so that we can then develop scenarios that will incorporate the output of this process with a historical knowledge of asset classes and how they behave within portfolios.
Flexible Portfolio Design
At Avalon, we use six asset classes to build a portfolio that may include any one of the assets or a flexibly-balanced mix of all of them. The balanced approach seeks to reduce risk and smooth out portfolio volatility. A portfolio with fewer asset classes may also be used to meet a targeted need or for those seeking more aggressive returns. Our global orientation and extensive use of asset allocation provides the broadest opportunity for designing the right investment portfolio for a particular situation.