Home

Investment Philosophy

 If you have been invested over the last 20 years, as many of our clients have, you have seen some unprecedented events in the financial markets. The dot com crash, the great recession, the lost decade. These events proved to be troubling for many investors and still linger in their minds when discussing their investment portfolios.

The financial crisis highlighted a number of important issues and lessons for investors. One of which being the seemingly increased correlation of many publicly traded asset classes. As most people will remember it seemed like everything went down together in 2008.

How We’re Different

How we distinguish ourselves from most other advisors is our portfolio design, emulating the Yale Endowment Model. We refer to this as The Household Endowment Model™.

The Household Endowment Model™ is our own institutional-style wealth management platform developed exclusively for well-qualified investors.

The Household Endowment Model™ is Built On Three Basic Principles

1. Similar to Yale’s Endowment Model we believe in using outside managers to

manage our client portfolios. We believe that qualified external managers should be

used and given considerable autonomy to implement strategies as they see fit.

2. Maintain an allocation to correlated and non-correlated private and public asset

classes.

3. Where inefficient markets exist and where there is illiquidity, opportunity abounds for the patient investor. Yale has long believed that incremental risk adjusted returns could be increased by selecting superior managers in non-public markets.

One of the key aspects of The Household Endowment Model is our allocation of a significant portion of client assets to alternative investments. Similar to what the major university endowments have been doing for years.

Yale Alternative Allocation

                       

At Clear Harbor wealth management we realize that portfolio diversification for High Net Worth investors is not, and should not, be limited to just investing in different classes of stocks, bonds, and mutual funds. Increasing correlations in these asset classes can lead to increased risk during difficult economic times.

Through the use of alternative investments, we offer our clients an opportunity to invest in assets that are not highly correlated to publicly traded investments.

WHAT IS AN ALTERNATIVE INVESTMENT?

The term “alternative investment” is typically used to refer to an investment that is outside of publicly traded stocks and bonds. That could include real estate, private equity, senior loans, energy, commodities, natural resources, etc. Alternative investments represent an asset class that has the potential to provide returns that are not correlated to traditional stock and bond returns. The advantage of non-correlated investments is that when added to a traditional portfolio they can potentially increase overall returns while lowering equity market correlation risk.

Some Potential Advantages of Alternative Investments

  • Low correlation with traditional investment markets
  • Provide more consistent returns
  • Offer tax reduction techniques
  • Offer potential inflation hedge
  • Potential for higher returns than more traditional asset allocation approach.

Some Drawbacks

  • Less liquidity than traditional investments
  • Higher investment minimums
  • More complex than stock and bond portfolios

Historically these kind of investments were only available to the ultra-wealthy and institutional investors that had tens of millions of dollars to deploy.

However, over the past several years many investment managers have fought to make their programs more accessible to retail investors. While a large number of them are still only available to accredited investors a lot of progress has been made.

If you would like to learn more about how The Household Endowment Model™ and the use of alternative investments can benefit you and your portfolio, visit the contact page or simply give us a call at 850-687-3384.

This material does not constitute an offer to sell or a solicitation to buy any securities. An offer can only be made by a prospectus that contains more complete information on risks, management fees and other expenses. Read the applicable prospectus before you invest or send money. There is no assurance that the investment objectives of these programs will be attained. Consult the applicable prospectus or offering memorandum for suitability standards and minimum investments in your state. There are risks involved in investing, including market fluctuation and possible loss of principal value, and the investment may not be suitable for all investors. Certain state suitability requirements may apply.

Social icons