Portfolio Management
Thank you for choosing IBR-Global Markets Ltd to manage your financial portfolio. Together, we’ve created this customized investment risk profile that outlines our recommendations for investment strategies and management of your account in accordance with our specific financial goals. Those objectives, which are outlined in this document, have been established in accordance with the profile information of IBR-Global Markets Ltd
CLIENT EXPECTATIONS
IBR-Global Markets Ltd believes that assets, due to their varying levels of risk and return, tend to behave differently in different market conditions, and that investments in a properly allocated portfolio should not all move in the same direction. Therefore, IBR-Global Markets Ltd utilizes active asset allocation to manage client portfolios. Asset allocation is a portfolio management approach that attempts to balance risk and reward by apportioning a portfolio’s assets among asset classes with varying levels of correlation. Portfolios are allocated according to individual goals, investing time horizon, and risk tolerance. Over the long term, asset allocation aims to maximize returns while minimizing risk.
RISK BUDGETING METHODOLOGY
IBR-Global Markets Ltd investment methodology revolves around establishing a risk budget for each client, which takes into account your individual financial goals, ability to handle risk, and overall investment time horizon. Once assigned, IBR-Global Markets Ltd seeks to not overspend or under use your risk budget. IBR-Global Markets Ltd portfolio managers then allocate your account by overweighting what we believe to be strong asset classes while pursuing to keep the risk level consistent. IBR-Global Markets Ltd understands that risk characteristics and volatility of investments vary, even in the same asset class. More broadly, while stocks (equities) have historically been considered more risky than bonds, some bonds may have higher risk than more conservative equity investments, as shown in the diagram below. By viewing equities and bonds on the same risk continuum instead of relying on a stock-to bond ratio, we have the ability to overweight favorable asset classes while keeping portfolio risk relatively constant even as the portfolio changes. This process results in portfolios designed to take advantage of more attractive opportunities for investment while seeking to maintain risk levels established by your risk budget.
Discipline
Many investment managers use a stock-to-bond ratio approach to control risk with a portfolio, but IBR-Global Markets Ltd does not believe this method is a precise enough measure of actual portfolio risk. For example, a portfolio’s risk using a stock-to-bond ratio approach is greatly affected by whether the risk comes from a small allocation to emerging markets, a sizable allocation to high-yield bonds, or a moderate overweight of the equity allocation. However, because risk budgeting takes into account other risk measures, such as standard deviation, beta, and downside capture, IBR-Global Markets Ltd can measure these options and determine to what degree a client’s risk tolerance can handle each.