Researching Tomorrow’s Solutions Today

At Private Client Wealth Advisors, our goal is to utilize and provide expert research to our clients that will help them to be financially confident over time. Every investor has, over time shaped their own investment philosophy. We seek to understand what your philosophy is and help shape and influence future investment decisions over time.

WITH THIS IN MIND WE PROVIDE ACCESS TO FOUR TYPES OF PORTFOLIOS:

• Academic Based
• Socially Responsible
• Actively Managed
• Tax Efficient

ACADEMIC BASED

Academic based, structured portfolios are based upon over 80 years of financial market data and Noble Prize-winning economic research. Influenced by Harry Markowitz, University of Chicago 1990 Noble Prize in Economics and Eugene F. Fama, University of Chicago 2013 Noble Prize in Economic Sciences, the underlying belief is that markets are efficient and are virtually impossible to consistently outperform. Instead, the approach is to capture the market rates of return by owning a large number of stocks and bonds across selected asset classes resulting in a diversified* structured portfolio. These portfolios combine multiple asset classes and are designed to be efficient by minimizing trading costs and emphasize owning small companies and value companies.

SOCIALLY RESPONSIBLE

For some investors, socially responsible Investing (SRI) also known as sustainable and responsible investing is an important way to invest in organizations that mirror their beliefs and are conscious about their effects and impact on society.

This approach to investing integrates environmental, social and corporate governance (ESG) criteria with financial analysis and decision-making. Socially responsible investing seeks out well-managed, forward-thinking organizations with the thought that they will have better long-term financial prospects.

Socially responsible investing has become more mainstream and is an important for many individual and institutional investors who seek to:

Encourage improved corporate social and environmental performance through an active investment strategy.
Align their investments with their personal values by avoiding companies that do not meet certain standards.
Identify companies with better long-term financial performance through the analysis of social and environmental factors.

SRI was first formally practiced by faith-based investors who avoided companies involved in tobacco, alcohol, and gambling. More recently, however, SRI has evolved beyond such simple avoidance screening to include the following four aspects:

Shareholder Advocacy – Using your position as an owner in a company to actively encourage a company to improve. Shareholder advocacy can take many forms, from something as simple as a phone call, to writing a letter, to filing a shareholder resolution calling for a company to take a particular action (which can ultimately come to a vote in front of all shareholders). Advocacy also includes proxy voting, or simply casting your vote as a company shareholder.

Research & Screening – Examining the social and environmental records of companies to determine which companies to include or exclude in an investment portfolio. Historically, screens were employed to screen out investments that did not meet an investors ethical standards. Since then, screens have evolved to also seek out investments in companies that are taking progressive steps to address important social and/or environmental issues in the course of working to be a profitable enterprise.

Community Investing – Providing access to capital for individuals and organizations in communities under-served by traditional financial institutions so they can create jobs, build homes, and finance community facilities. Community investors may accept slightly below-market rates of return to encourage investment that can build or rebuild communities. Community investors seek social returns in addition to financial returns.

Social Venture Capital – Seeks out early-stage investments in companies that have identified profitable ways to meet societal needs (such as alternative energy companies), before they are publicly traded. Colorado has done a great job embracing some of these alternative energy companies such solar and wind energy. This early stage investing can help these companies secure necessary funding to grow and often leads to healthy returns for shareholders.

The myth that you can’t earn competitive returns through socially responsible investing is just that: a myth. Research shows that companies that integrate social, environmental and governance concerns into their business practices can provide competitive rates of return to investors that share their beliefs and desire to be socially conscious.

ACTIVELY MANAGED

Actively managed portfolios are portfolios which are actively managed by an individual manager, co-managers, or a team of managers. This simply means that the mutual fund manager is your hired portfolio builder. Depending on the fund’s charter, a blueprint for what the fund intends to do for the investor, the fund manager(s) can chose what she/he thinks is best for the shareholder and in whatever quantity (percentage of total holdings in the fund) will achieve that goal and is based upon research where the manage may feel that growth will occur in a certain area of the market or that a certain stock or assert class may be under or over-valued. This can be costly as managers make changes throughout the year.

Well-run managed funds that have long-term performance records that are above their peer and category benchmarks are also excellent investing opportunities. There are a number of top-rated fund managers that consistently deliver exceptional results. Such well-run funds will register very high on the Fund Investment-Quality Scorecard you are learning about in these pages.

It is worth remembering that despite their impressive long-term records, even top-rated fund managers can have bad years.

TAX EFFICIENT

Tax-managed portfolios are portfolios that are structured to provide the best tax situation for investors. The idea behind a tax-managed portfolio is to include investment options that help to minimize the tax consequences associated with the profits, while still earning the best possible return on the investments. This can be managed by employing a few different approaches to the task.

First, the underlying tax-managed fund can focus on including only securities that are projected to offer a modest yield. By going for securities that will produce a smaller return, it may be possible to keep the investor in a lower tax bracket. The end result can be less taxes owed on the dividends and interest earned from the securities.

Another common approach employed with a tax-managed fund is to attempt to manage the distribution of capital gains to the investors. Essentially, this means structuring the mutual fund so the process is more of a buy and hold approach than a buy and sell approach. When there is less turnover on the investments that make up the tax-managed fund, the end result can be to contain the overall growth and thus minimize the taxes due for capital gains.

* Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk.