We believe that consistent adherence to an investment strategy as set out in a client’s personal Investment Policy Statement ("IPS") is more important than timing or security selection. We personalize each client’s IPS based on their risk tolerance, time horizon and tax situation. For every portfolio we manage, we seek broad diversification and tax efficiency. Amicus seeks to maximize after-tax returns given the appropriate amount of risk. Amicus seeks investments that are highly marketable, i.e. securities without surrender charges and with a ready market. Amicus places a high priority on reducing the client’s investment expenses by utilizing only no-load products, most of which are passively managed. Amicus seeks to minimize transaction fees by making infrequent and efficient trades.
Amicus believes that the primary determinant of risk and return is the mix of asset classes into which investments are placed. This allocation forms an organized, long-term framework on which specific and consistent investment decisions can be made. By keeping a constant allocation, Amicus believes that rebalancing enhances returns by causing a general pattern of buying into asset classes at lower than average prices and selling when asset classes are higher. Since each rebalancing triggers transaction costs and perhaps taxes, Amicus believes that portfolios should be rebalanced infrequently and only with an eye on the tax consequences. Therefore, Amicus establishes fairly wide intra-year bands (the percentages of the portfolio made up of each asset class that triggers a reallocation) and only rebalances at quarterly intervals. This combination time/value rebalancing trigger prevents too-frequent transactions and dampens the effect of an extended downturn in value of an asset-class. Near the end of each tax year, Amicus carefully examines how to rebalance the portfolio in light of the tax consequences to the client.
Amicus uses the following ten-step asset management process:
- Define scope of engagement with client (Service Agreement)
- Learn about the client and the client’s goals
- Educate the client (Amicus Asset Management Course)
- Answer client’s questions and resolve concerns
- Analyze financial and personal client information
- Prepare strategies and personalized IPS for the client
- Review IPS with the client and get approval
- Implement the IPS with the client
- Measure, monitor, manage, and report to client
- Implement periodic updates and rebalancing
Amicus recommends passive investment instruments (index funds or ETFs) for most asset classes and active managers (mutual funds or separately managed accounts) for small-capitalization and emerging markets equities. A client’s portfolio is likely to contain a combination of no-load mutual funds, exchange-traded funds, individual securities, money market and/or bank accounts, annuities, real estate investment trusts, separately managed accounts and life insurance products. Cash accounts are kept primarily in traditional money market accounts and money market mutual funds. Amicus believes that adding diversified and marketable real estate securities to a portfolio of stocks and bonds reduces the volatility of a portfolio. Amicus tends to recommend a substantial allocation in real estate securities (primarily REITs and REIT ETFs). Amicus does not engage in short sales or margin purchases and does not purchase letter stock, hedge funds, commodities contracts, derivative contracts, or warrants. Some of these activities may occur within separately managed accounts, mutual funds or money market accounts.
