Portfolio Structure

Our Tactical portfolios utilize a core and explore structure and are all capitalization portfolios that are primarily long with the ability to use portfolio hedging, inverse and leveraged funds or ETFs to fill out the portfolio structure.  These portfolios utilize the same in depth investment research as our equity based portfolio, but stops one level higher and is built on a fund base to capture the general market and sector trends while still being opportunistic and keeping a strong risk management theme.  These portfolios managed by Tommy are designed to work with the broad spectrum of needs many of our clients have through their working and retirement years.  The multiple risk levels of these diversified portfolios help us fill the gaps in their investment portfolio profiles while adding a strong risk management component.  Currently, we provide three main risk profiled portfolios on multiple custodial platforms.

“If what you did yesterday seems big, you haven’t done anything today.” – Lou Holtz

Portfolio Segmentation

These portfolios are constructed of core positions which are supplemented by the exploration segments.  The core positions are based on our macro outlook for the market environment we are in to choose the best asset classes for longer term trends and the explore segment is actively rotated among the top opportunities we find as we dig into all facets of the markets.  Sectors and commodities are the most frequent in the rotation, but this segment is open to any theme we can find a liquid portfolio to invest through funds or ETFs depending on the platform where the portfolio is held.

Risk Management

Position Sizing is the first line of defense for the portfolio.  This is where we show our conviction on a trade by allowing us flexibility to make adjustments to size to better dial in the potential risk to the portfolio expected for any given trade.

  • VAR Risk Model
  • 8-20 Holdings with weightings depending on portfolio segment
  • Core positions are weighted between 5-20%
  • Explore positions are weighted between 2-10%

Portfolio Hedging utilizes inverse funds and in some portfolios put options on index ETFs to help hedge out a portion of the market risks identified in the portfolios.  The specific tools utilized here will depend on the options provided by the specific platform of the custodian holding the accounts.

Sell Criteria give us consistent parameters to know when to reevaluate a trade to potentially take proceeds or exit.  The criteria used will be matched to the specific trade type and plan design we are working with.  Portfolio hedging can be used instead of selling the position if our long term thesis is undisturbed.  Some examples are

  • Close below the 13 or 21 exponential moving average
  • Cross of the weekly 8 and 13 exponential moving averages
  • Close below trailing stop level
  • Failed breakout
  • Change in underlying options positioning that served as a basis for the original trade plan

If you are interested in more detail on these and which custodians we can offer them through, we are happy to set up a time to discuss through our contact us page.