Investment management at Shepherd Financial Partners begins with a discussion of your goals, which in turn, set the objectives for the portfolio. These objectives, and the strategies utilized to pursue them, are outlined in an Investment Policy Statement (IPS). In addition to your goals, the IPS will address your current and future cash flow requirements, risk tolerance, tax considerations and legacy planning.
Your portfolio will be constructed utilizing an asset allocation model consistent with your IPS. Asset allocation divides the investments in a portfolio amongst different asset classes, such as equities, fixed income and alternative investments. Within each asset class, specific securities will be purchased based upon our in-house investment process. Our process incorporates both top down and bottom up fundamental analysis and quantitative analysis in making investment decisions.1
We employ a rigorous buy/sell discipline and advanced technology to monitor the investments in our portfolios on a continuous basis. We periodically rebalance portfolios based upon changing market conditions and/or attractive buying opportunities. Please note: rebalancing in a non-qualified account may have tax consequences.
Risk management involves understanding and evaluating the risk involved with the investments in a portfolio in relation to their return and contribution toward achieving the portfolio’s objectives. We build upon the diversification provided by asset allocation and security selection by strategically utilizing both active and passive money management instruments in an effort to create a better risk-adjusted portfolio.
We employ the process of risk budgeting to make decisions about the passive and active investments for our portfolios.2 Risk budgeting is the process of quantifying where risk is in a portfolio and then identifying what are the optimal asset classes to utilize in order to “spend” that budget most efficiently.
1 There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
2 Investing involves risk including loss of principal. No strategy assures success or protects against loss.