601 Heritage Drive
PURPOSE BUILT PORTFOLIOS
Our portfolios begin with creating strategic asset allocations for the Growth and Income Portfolios. The strategic allocations for each portfolio have different risk/return profiles. Both portfolios are well diversified and designed to meet different investment objectives.The Strategic Asset Allocation can be thought of as the baseline long-term asset allocation for each portfolio. This gives us a frame of reference against our option overlay positions to enhance the risk/ reward characteristics of each portfolio.
The first step in our Asset Allocation Process is to establish a strategic (long-term) asset allocation for each portfolio. We believe that at the core of building a diversified and efficient portfolio is Modern Portfolio Theory (MPT). According to the MPT, it's possible to construct an "efficient frontier" of optimal portfolios. We utilize the expected return, correlations, and standard deviation of various asset classes to design the most efficient growth and income portfolio.
The first step is to determine the type of asset classes and investments to use in constructing the portfolio. Below is a list of some asset classes.
These broad asset classes can be further broken down into sub asset classes that can be used to create a more efficient portfolio. For example, international stocks would include developed markets and emerging market equities as well as growth and value components.
Asset allocation and diversification do not assure or guarantee better performance and cannot eliminate the risk of investment loss. As with any investment strategy, there is the possibility of profitability as well as loss.
Past returns often are not related to future returns, so why are past returns used by so many when deciding upon allocations in a portfolio? Future expected returns, while of course they are just assumptions, can be more useful when deciding upon different asset allocations. Future expected returns are taken from several different sources and averaged to give return assumptions to be used when deciding upon allocations in the different portfolios.
Past performance is not indicative of future results.
Townsend Financial Life Management utilizes a bucket strategy to help those in retirement with investing their money while also using that money for their expenses. The bucket strategy is a popular strategy because it allows for the funds to be invested in different strategies depending on the time horizon for when those funds are needed. This allows funds that will not be tapped for a longer period of time to be invested more aggressively than those that will be needed sooner.
Asset allocation and diversification do not assure or guarantee better performance and cannot eliminate the risk of investment loss. As with any investment strategy, there is the possibility of profitability as well as loss. Past performance is not indicative of future results. Options involve risk and are not suitable for all investors. Certain complex options strategies carry additional risk. Please read the options disclosure document titles Characteristics and Risks of Standardized Options by clicking on this hyperlink text https://www.theocc.com/about/publications/character-risks.jsp before considering any options transactions. Covered calls provide downside protection only to the extent of the premium received and limit upside potential to the strike price plus premium received.