A well-diversified portfolio comprises multiple asset classes whose returns are uncorrelated. Our approach is to select liquid, publicly-traded investments that mimic the returns of the categories below.
Domestic and Foreign Equity represents ownership of global businesses whose growth and value should provide us with returns above inflation + 5% over long time periods. We compare correlations of other asset classes against this category.
Principal protection is the primary motivation for our investment in fixed income. It should serve as a buffer against drastic declines in other asset classes.
This asset class provides our portfolio with inflation protection and high visibility into future cash flow. The drivers of value creation within oil and gas, timber, infrastructure and real estate are power diversifiers within our portfolio.
Properly selected investments in leveraged buyouts and venture capital have the potential to generate high returns relative to other equity alternatives, providing a means to enhance overall portfolio results.
Absolute return and hedging proxies can provide returns that are independent of the broad market indicies. But unlike fixed income, they may generate higher long-term real results.
