Wealth Creation and Preservation uses state-of-the-art computer software to apply statistical, financial and algorithmic innovations to enhance the investment value and safety of client portfolios. This process of asset optimization (also known as modern portfolio theory, capital market theory or mean-variance optimization) is the scientific combination of various asset classes (fixed income, large cap stocks, small cap stocks, international, hedge, etc.) to maximize return and minimize risk. We look at tens of thousands of possible combinations to determine which combination provides the optimal expected risk/return.  The process also involves rebalancing client portfolios among asset classes, dealing with alternative investments and meeting cash flow planning objectives.  

Mean-variance optimization is achieved when the expected return of the portfolio is greater than other similar (but non-optimized) portfolios with the same or higher level of risk.  Reaching this optimization is the efficient frontier – where returns are maximized for any given level of risk (or, minimizing risk for any given level of return).  It involves looking at tens of thousands of possible investment combinations to determine which combination provides the optimal expected risk/return.  This process quantifies the notion that diversification reduces risk.  On the efficient frontier graph, with standard deviation on the horizontal axis and expected return on the vertical axis, as the assumed level of risk (standard deviation) increases, the obtainable expected return increases. In practice, the slope of the efficient frontier line on the graph is not straight, but rather decreases as risk rises.

Please contact us so that we may discuss how we can make a real difference for your future.