OUR PORTFOLIO CONSTRUCTION PROCESS

We use the following five steps in our optimal portfolio construction process:

Step 1: Create a Detailed Client Profile based upon the Client’s investment objectives, risk tolerance, and the specific goals and needs.

Step 2: Identify the Investment Opportunity Set, utilizing Exchange Traded Funds (ETFs), stocks, and individual bonds.

Step 3: Identify Where the Client Fits on the Efficient Frontier, understanding the balance between risk and return.

Step 4: Create a Strategic Asset Allocation based upon historical risk-adjusted returns that is customized to the Client’s specific needs and objectives.

Step 5: Tactically Rebalance Portfolios Based Upon a Combination of Factors such as the Client’s changing needs, fundamental analysis, and DT’s proprietary technical analysis.

Process

DT Investment Partners’ investment process is a combination of both top-down and bottom-up analysis.

Top-Down Analysis:

  • Project global economic outlook on a 3-month, 6-month, and 12-month basis to determine relative strength or weakness.
  • Evaluate fiscal and monetary policy impact for all major markets.
  • Determine inflationary expectations and impact on purchasing power.
  • Assess valuation metrics in the context of historical averages and current growth expectations.
  • Utilize technical analysis to identify price trends in major asset classes.

Bottom-Up Analysis:

  • Review correlation of security versus benchmark of comparison and versus other asset classes to ensure desired diversification characteristics.
  • Perform comprehensive due diligence on managers that are meant to add alpha in a given asset class.
  • Identify tax efficiency of various investment vehicles.
  • Assess fees in relation to value-added security characteristics.
  • Perform structural analysis of exchange-traded funds to ensure proper index tracking.

Approach:

Strategic and Tactical

We develop strategic asset allocations based upon historical risk and return metrics. Strategic allocation ranges are designed to control risk for each type of investor. The primary driver of our tactical asset allocation shifts are the economic fundamentals of the various target markets. Tactical decisions are augmented by the use of a proprietary technical analysis model to ensure the portfolio is protected from irrational price momentum.

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