Investments selection is already in the middle of the process. First we look at a client’s tolerance for risk. Second, we look at the client’s tax and estate planning needs, which can vary greatly by home country. Then we are ready to choose the investments for each asset class selected. We try to minimize the impact of taxes on earnings. We take advantage of the special tax rules for non US investors.(NRA's)
From our perspective, the selection of asset classes can account for 90% of returns (see article by Brinson, Beebower and Hood 1986 “Determinants of Portfolio Performance”, Financial Analysts Journal Vol. 42). We use passive indexes where available to get low cost, risk managed investments in each class. We also consider the need for liquidity in case of a sudden change in the client’s situation.
What we are not: gamblers, stock pickers, or predictors of the future. We try to position the client’s portfolio to take advantage of good markets and to minimize losses in bad markets. Managing risk has become just as important as seeking returns.