Behavioral Portfolio DesignTM
Most investors hope to avoid losses and realize growth. We build portfolios that seek to reduce risk and participate in the market.
Behavioral Portfolio Design™ means doing the opposite of the crowd and taking advantage of its poor decision-making abilities. The crowd tends to buy near market tops and leave risk management strategies after extended bull markets. Toews helps advisors guide investors through market challenges, hoping to improve results and create customizable plans for investors.
How We Manage Money
In an attempt to achieve market returns and avoid extreme losses, we build portfolios with two imperatives. First, we assume worst case scenarios will potentially happen, and manage products designed to capitalize on significant market declines. We simultaneously assume that best case scenarios will potentially happen. That means that our portfolios are positioned to attempt to gain if markets stretch higher, but are built to address risk should markets fall.
How We Work With Advisors
Toews introduces a complete toolset for advisors to position themselves as Behavioral Economics Counselors. These tools include guidance in portfolio construction, custom investor owner’s manuals and private labeled videos, and ongoing investor communications.
Our Defensive Alpha portfolios aim to reduce market drawdowns without sacrificing participation in rising markets. These strategies seek to invest in a global allocation of market blend indices during rising markets, but attempt to exit the equity portion to defensive, low volatility stocks in the early stages of market declines. When markets rebound, the portfolios are expected to return to the target allocation.
Our Unconstrained Tactical strategies attempt to track global allocations of market blend indices during rising markets, but seek to move exposure to fixed income instruments and/or cash as prices start to move lower. When markets begin to rebound, the portfolios attempt to return to fully invested positions. Because these strategies become defensive, they are a means of attempting to gain access to above inflation returns with robust loss avoidance.
Tactical Fixed Income
Our fixed income portfolios attempt to tactically allocate assets among High Yield, Aggregate, TIPS, and/or Short Duration Bonds. Our objective is to improve yields and to mitigate interest rate and inflation risks.
The Behavioral Portfolio
- Broaden Historical Analysis
- Think Comprehensively about Risk
- Build Portfolios Attempting to Meet Behavioral And Economic Needs
- Stress Test against Deflation, Inflation, and Stagflation
Insights & Resources
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For the year, the S&P 500 moved higher by 18.4%, a remarkable feat considering the elevated levels of unemployment, business bankruptcies, and disruption of the travel, hospitality, and entertainment industries. The year provided our investors an opportunity to see how Toews strategies functioned during a bear market, the first realized since the 2008 financial crisis1. In this commentary, I’ll discuss