Asset Allocation Investment Strategy

Only pay for the advice you need. Our thoughtful investment process could keep tens-of-thousands

of dollars annually in your account--where it belongs.

Grouped by Organization, Process, and Value, our strategy was built from the ground up by listening to the following investor concerns and preferences:

Organization

We wish to engage an investment manager who is not only a fiduciary--at all times acting in the best interest of the client, characterized by the duties of Loyalty and Care--but whose business incentives are completely aligned with ours. Whether or not properly disclosed, we seek an adviser with few, if any, potential conflicts of interest with respect to investment decisions made on our behalf.

Our investment goals are holistic, but our accounts are widely spread. Ideally, we would like an investment manager who advises, reports, and measures--not only on our Personal Accounts, Trusts, and IRAs--but also on our Employer Sponsored Retirement Plans. Integrated, organized, and concise works best for us. 

We would prefer an investment report that simply explains what has been done and how it is working. There is little need for reports that focus on general economic conditions and financial trends.

Process

We recognize there is a tendency to act in ways that are emotionally driven and contrary to our financial health. What we would like is a human gatekeeper overseeing our investments but without the high costs that typically come with such oversight.​

We wish to understand our investment manager's process. Details are not necessary. However, a general understanding of the criteria on which decisions are made would make us feel more comfortable. We recognize that sticking with a plan, in both good and bad times, is critical to long-term investment success; and to do so, we need to appreciate and buy into the investment process.

As retirees or investors approaching retirement, we are placing greater emphasis on preserving capital and less on maximum growth--down-shifting our risk. A manager who understands this and has developed an investment strategy to reflect our shift of priorities would be welcome.

 

Value

We are now financially secure. Therefore, we believe that the scope for additional financial planning and comprehensive wealth management is rather limited, at best. In the end, we are hoping to simplify our finances and seek a direct relationship with an investment fiduciary who charges solely for that service, in effect downsizing the breadth of our financial services while only paying for what we need. This step, in turn, will hopefully result in our money working for us in more ways than just the growth of capital.

We realize that minimizing all-in expenses is important to the growth of capital. However, in our current relationship(s), we are not sure what our direct and indirect expenses are. We hope to locate a manager with a well-designed, fully transparent fee structure that provides significant cost savings as accounts increase in value.

We would appreciate fewer fee layers and a manager who holds itself accountable when making investment decisions.

Recommended minimum account size of $500,000.

Next step? Please connect with us via email, connor@bluelistpartners.com, that you
would like to hear more about BlueList's investment strategy. We'll either schedule a
call or add you to our quarterly mailer, whichever you prefer.

It is worth noting that we are successful in what we do and wish the
same for you. Feel free to inquire without any pressure or repeated
follow-up calls. Simply put, if you care, we care.

BlueList Investment Allocation Philosophy and House View Matrix

December 31, 2021

 

 

Philosophy:

Measuring risk tolerance and loss aversion is critical to selecting a suitable portfolio. The client must stay with the strategy in good times and bad.

Settle on a basic, rules-based strategy and stick with it.

When investing, first decide if you are playing offense or defense.

Mean Reversion -- the opposite of chasing performance -- is a cornerstone of our process.

Diversify and strive to avoid large losses of capital.

Time in the market is more important than market-timing. 

Fees, taxes, and conflicts of interest matter.

Be fearful when others are greedy, and greedy when others are fearful. 

 

 

 

 

Disclosures:

The House View Matrix details how BLP currently views the markets we can invest in. These market views are subject to changes as new data is considered, and may not reflect exactly how portfolios are positioned at the time of this report.

BLP applies, on a best efforts basis, its investment strategy for individual and household portfolios. Investment considerations may include, for example, tax impact and unique account instructions. In addition, fund choices for held-away assets may limit BLP's ability to implement its investment strategies.

CURRENT

STRATEGIC

Asset Allocation

Neutral

Underweight

Growth

BlueList (BLP) remains firmly on defense. Nonetheless, our model rules keep us engaged by defining minimum and maximum commitments to various asset classes. While not overly enthusiastic about either stocks or bonds, we continue to favor stocks as we enter 2022. Within the stock space we continue to favor International, Emerging Market and Small and Mid-Size companies.  In addition, we continue to own stocks tied to the prices of Gold and Commodities as a means to diversify the portfolio.   

Income - Bonds

Duration and inflation risk have BLP underweight bonds as we remain concerned over the impact that rising interest rates will have on overall bond returns, particularly for longer-term individual issues and bond funds. By rules we are engaged, but are only buying opportunistically and keeping average portfolio maturities relatively short.   

Max Underweight

Max Underweight

Income - Stable

BLP is overweight investments we consider stable. Unsurprising, given our generally negative view on stocks and bonds, we continue to place a greater emphasis on preserving capital.  

Overweight

Neutral

Growth

U.S. Stocks

BLP is leaning away from Large Capitalization US companies in favor of Mid and Small (SMID) sized ones. Out of favor sectors we like include Consumer Staples and Financials.  

Max Underweight

Underweight

International Stocks

International equities remain cheap relative to the US. Reversion to the Mean is a cornerstone of BLP’s investment process and we look for underperforming International Equities to revert, and outperform US Equities on a going forward basis. .   

Overweight

Neutral

Emerging Market Stocks

As with International Developed Stocks, Emerging Markets have significantly under-performed the S&P 500 Index and appears attractive. BLP continues to overweight EM. 

Overweight

Overweight

Alternatives

As BLP leans away from a major asset class – US Equities – we are leaning toward Commodities and Gold in order to diversify portfolios.  

Overweight

Overweight

Hybrids - Equity Income

BLP’s ratio of stock dividends to bond yields remains historically high. For conservative investors seeking income, high dividend paying International equities is likely a better long-term investment choice relative to bonds.   

Neutral

Neutral

Hybrids - Energy Infrastructure & Real Estate Inv Trusts

The yield spread on energy transmission companies (MLPs) remain attractive and we continue to be invested in this space. . BLP remains neutral on Real Estate Investment Trusts, or REITs.

Neutral

Underweight

 
Income

Non-Investment Grade Bonds

BLP is neutral on Emerging Market and High Yield bonds as the yield pick-up over high grade bonds has narrowed considerably. .   

Neutral

Neutral

Investment Grade Bonds

Like the Non-Investment Grade Bond sector, the yield pick-up in the investment grade bond space is uninspiring and we hold a up-in-quality bias within this sector. Investors are beating the bushes to find yield and are bidding up bond prices and pushing yields lower. BLP is distancing portfolios from this parade of yield searchers. 

Underweight

Underweight

Stable

BLP favors an overweight allocation to Stable. We are generally uninspired by the risk premium available to investors in the stock and bond markets. Although BLP's rules-based approach keeps us market-engaged and our clients invested, we are tactically risk-off.

Overweight

Neutral

Next step? Please visit our contact page and let us know if you would like to hear more about BlueList's investment strategy. We will schedule a call or add you to our quarterly mailer, whichever you prefer.

It is worth noting that we are successful in what we do and wish the
same for you. Feel free to inquire without any pressure or repeated
follow-up calls. Simply put, if you care, we care.