The Enhanced Core Portfolio Series was developed and is managed internally at Cona Investment Advisors, LLC by Chief Investment Officer Richard Eddy. This series of portfolios fuses elements of passive portfolio management together with elements of active portfolio management. Because of this hybrid approach, these portfolios work well as a complete investment solution. They also work well as a core portfolio for our clients that prefer a “core/satellite” approach to portfolio management.*
Passive Asset Allocation + Active Tactical Management
The Enhanced Core Portfolios Series by Cona Investment Advisors, LLC provide our clients with access to a carefully crafted approach to investing that combines the best elements of passive asset allocation together with the power of active tactical management. This “mixed methods” approach results in the potential for superior risk-adjusted returns across all levels of risk tolerance.*
Globally diversified, tactically managed, and strategically rebalanced. This series of portfolios provide our investor clients with access to investment portfolios that are constructed based on decades of Nobel-prize-winning academic research and modern innovations within the investment industry. Best of all, clients pay no commissions or trading costs, just Cona Investment Advisors’ tiered management fee for access to all of our investment management and financial planning services.
The Enhanced Core Portfolio Series expands on an investment philosophy that is based on established academic research in the field of portfolio construction and asset pricing. Grounded in the academic work that brought us Modern Portfolio Theory and the Fama-French Three-Factor Model, elements of behavioral finance are considered to inform the active tactical portfolio management decisions.
Portfolio Construction Process
Driven by our investment philosophy, our Enhanced Core Portfolio Series models are constructed and actively managed by focusing on four main themes: Asset Allocation, Allocation Optimization, Investment Selection, and Tactical Alpha Generation.
Portfolio management has evolved over time, and we take advantage of this evolution. Traditionally, asset allocation included just three asset classes: cash, U.S. stocks, and U.S. bonds. Access to other segments of the global economy simply wasn’t possible for most investors. Today, through the use of Exchange Traded Funds (ETFs), we have the ability to invest efficiently in nearly any sector of the global economy. With over 20 asset classes to choose from, we are able to invest globally, creating highly diversified portfolios designed to produce superior risk-adjusted returns over the long term.*
This chart, often referred to as a “periodic table of investment returns”, shows how a variety of asset classes and market segments have performed over the past 20 years. As you can see from the chart (click the image for a larger version), different asset classes outperform at different times. This is why we take advantage of what Markowitz calls "the low volatility anomaly". Specifically, that a properly diversified portfolio will reduce volatility risk without negatively impacting potential returns.
We view investments as the ingredients that allow us to do the job of constructing and managing our clients’ portfolios. And to do the job of constructing portfolios that offer superior risk-adjusted returns, we utilize a basket of hand-selected Exchange Traded Funds (ETFs) from a marketplace of over 1400 ETFs available today. ETFs give us several distinct advantages over traditional mutual funds. Among these advantages are low internal costs, tax efficiency, and liquidity. ETFs also allow us to track distinct market sectors with great accuracy due to their internal design and don’t suffer from the “style drift” that is associated with traditional mutual funds. This lets us manage the investments, not the managers. Finally, ETFs make it possible for us to employ our "tactical alpha" methodology with a high level of fidelity.
The goal of our tactical alpha approach is to improve the risk-adjusted returns of our portfolios as compared to their underlying benchmarks. We apply a number of tactical alpha strategies to achieve this goal. In addition to shifting the overall composition of our portfolios in response to market conditions, we also employ “smart beta” and “factor investing” approaches when appropriate. The advantage to this approach is that we can maintain the overall global diversification of our clients’ portfolios while seeking risk-managed, outsized returns.
Five Portfolio Models
The Enhanced Core Portfolio Series consists of 5 model portfolios. Each is managed to achieve a specific, targeted combination of long-term rates of return, volatility, and maximum drawdown. In all cases, these metrics seek to improve on an unmanaged portfolio with similar risk characteristics.
*No investing strategy can assure or guarantee superior performance nor eliminate the risk of investment losses.