CST Portfolio Management is our proprietary Core, Satellite, Tactical portfolio management strategy. Our CST strategies were developed to enhance traditional portfolio management for clients who understand the long-term nature to their assets. It brings a multi-dimensional view to the role that each asset plays in a portfolio.
- Most of our clients view the assets that we manage as their long-term, family nest egg.
- Larger institutional investors, especially endowments (accounts designed to be managed in perpetuity) approach the market differently.
- Because of our long experience in the market, we realize that the only way to create meaningful returns over time is to have a good plan, and stick to it in both good and bad markets.
- There are lots of risks that are not captured in traditional models. Some of these risks include: Liquidity, transparency, exposure, leverage, time horizon, sector or industry concentration.
- We needed to find a structural way to keep clients from making many of the mistakes that hurt their investment returns.
CST is the acronym for our proprietary Core, Satellite, Tactical portfolio management strategy. Our CST strategy is very similar to that used by large endowments, foundations and pension plans. It brings a multi-dimensional view to the role that each asset plays in a portfolio.
In defining whether an investment fits into Core, Satellite or Tactical, it is reviewed based on several criteria, including:
- The role that each investment plays in the portfolio
- The level of diversification of the underlying investment
- The time frame of the investment
The Core allocation represents 50 - 80% of total portfolio assets. The objectives of the core portfolio are to:
- Gain broad diversification
- Invest in liquid securities
- Gain exposure to the risk/return profile of world stock and bond markets
- Invest with a longer-term outlook (greater than 3 years)
The Satellite allocation represents 20 - 50% of total portfolio assets. The objectives of the satellite portfolio are to:
- Achieve returns better than general markets (alpha)
- Make specific investments where performance is expected to be good based on economic and market circumstances
- Achieve absolute returns
- Lower portfolio risk by adding investments with low correlation to traditional stock and bond investments (diversification)
- Invest with an intermediate-term outlook (6 months to 3 years)
The Tactical allocation represents 0 - 30% of total portfolio assets. The objectives of the tactical portfolio are to:
- Make investments to take advantage of current themes and opportunities
- Protect the portfolio in times of uncertainty
- Invest with a short-term time horizon (less than 6 months)
