Per Stirling’s Institutional SMA (separately managed account) Portfolios are designed to seek alpha: a level of long-term, risk-adjusted return that is higher than what would be reasonably expected with respect to each portfolio’s level of risk.
Our senior management team has specialized in managing Institutional SMAs since 1992, and believes so strongly in their process that they invest significant personal and family assets in the portfolios they manage. Per Stirling not only provides these portfolios directly to our clients, but also to clients of advisors from other firms that have selected Per Stirling as a strategic partner and portfolio manager.
Just as we do in our Wealth Management services, we embrace the fiduciary nature of our client relationships in our Institutional Portfolio management services, and are always committed to putting the best interest of the client above all else.
Participation in the Per Stirling Institutional SMA portfolios is limited to mutually-agreed-upon platforms, with a minimum account size to participate of $50,000. At present, Per Stirling limits access to its SMA Portfolios to the Fidelity Registered Investment Advisory platform, but is pleased to consider the addition of other broker-dealer and advisory platforms.
Our portfolio management services are as unique and varied as the financial objectives of our clients, and include both custom-designed portfolios managed by your personal advisor and company-sponsored growth portfolios.
We believe that the global capital markets are inherently inefficient over short-to-intermediate timeframes, thus allowing for the introduction of excess alpha through tactical asset allocation and the selection of individual securities.
We hold that the creation of excess alpha should be the primary objective of every portfolio, and that the optimal means of producing excess alpha is through a blend of top-down and bottom-up analysis.
We maintain that the mutual fund industry, as a whole, provides a talent pool that exceeds that of any single investment firm, but that the vast majority of mutual funds are inherently flawed due to the rigidity imposed upon them by prospectus, discipline, and the laws of large numbers.
We believe that specialization, be it by industry, style, asset class or geographic region, is critically important to the securities selection process, but that rigid specialization can destroy alpha, as investor preferences shift to other opportunities.
Finally, we believe in the absolute importance of maintaining flexibility to adjust both allocations and portfolio beta in response to macroeconomic and macro-market conditions. This can include employing defensive hedges (via inverse funds) as well as raising significant levels of cash during extreme market conditions.
We maintain that the creation of a successful, alpha-driven portfolio starts with fundamental and global macroeconomic analysis.
We use this to determine the asset classes, geographic regions, sectors, and relative allocation percentages that provide the best likelihood of producing excess levels of alpha in the anticipated environment. Then, we employ proprietary search methodology to select funds and other pooled investments to implement our allocation strategy. Technical analysis supplements our fundamental and statistical analysis, which helps us identify inflection points of intermediate to longer-term significance, and to optimize the timing of individual buy and sell decisions.
At Per Stirling, we also encourage and applaud style drift, and endeavor to manage “all-weather portfolios” that provide a reasonable likelihood of providing relative alpha, regardless of the market environment. This flexible approach empowers us to proactively adjust portfolio allocations in a way such that clients should never feel a need to change to a different portfolio as a reaction to a change in the market or economic environment. In other words, we believe that tactical changes should occur on the portfolio level rather than at the client level.
The Per Stirling management team utilizes a combination of fundamental, technical, and statistical analysis when constructing portfolios.
From our perspective, everything starts with fundamental analysis as this helps to identify the most promising investment opportunities for the firm’s portfolios. Here, the team considers a wide array of factors, for example: market valuations, earnings growth rates, economic data, currency trends, the interest rate outlook, and the prospects for fiscal and monetary policy.
The team also uses technical analysis to help identify inflection points of intermediate to longer-term significance, and to help optimize the timing of individual buy and sell decisions. Statistical analysis (with respect to both individual positions and overall portfolios) is utilized to determine how best to allocate the portfolios. In fact, one of our competitive advantages is the proprietary, statistically-based search engine used to help identify managers who have historically produced excess alpha from a bottom-up perspective.
In general, we emphasize pooled investments (for example: open-end mutual funds, closed-end funds, exchange-traded funds [ETFs] and exchange-traded notes [ETNs]) in lieu of individual stocks and bonds, as we maintain that individual securities risk is one of the greatest roadblocks to the creation and maintenance of excess alpha.
As part of our daily regimen, the management team analyzes every position being utilized in the model portfolios, reviews each position within the context of the overall portfolio, and spends a minimum of four to five hours in fundamental analysis of the global capital markets and economies.