The process begins with an analysis of the client’s present investment portfolio in terms of overall diversification, historical performance, and congruence with the client’s objectives and risk tolerance. *Diversification and suitability are measured to see if the portfolio as structured will meet the client’s needs and if rates of return are commensurate with the risks assumed.
*Diversification does not assure a profit nor protect against loss.
In light of the analysis and the client’s stated goals and risk tolerance levels, recommendations are made for the current portfolio. In making recommendations as to asset repositioning, NCA determines the proper percentage allocation among generic categories, as well as the type of investment style to utilize within each of the categories.
In determining the proper allocation for the client’s proposed portfolio, NCA relies on both quantitative and qualitative input. While experience provides the insights about investments suitable to the client’s profile, we also utilize a sophisticated analytical software program that has at its core a database with 20 years of data on over 50 different generic asset categories. This Morningstar program analyzes the mean rate of return for each generic asset category as well as the variability in that return. At the same time, the program compares the rates of return and the variations in that return for each of the different investments to determine how each performs in relation to the others.
Once the data is analyzed in this fashion, the program determines the optimal mix of assets to help increase the client’s return while reducing the risk.
Investors need to be aware that no investment plan/asset allocation can eliminate the risk of fluctuating prices and uncertain returns.
In determining the specific investment managers to use in building the portfolio, NCA relies on extensive due diligence. This due diligence covers the full range of investment managers in each of the generic categories to determine which managers have the best documented records of performance. Our evaluation includes a quantitative analysis of past performance using both a computerized database and information provided by independent sources. In addition, NCA principals meet and/or speak with the key individuals that will be managing each of the investment programs.
NCA continues to monitor each investment program, proactively recommending changes where they are deemed appropriate. Communications include regularly scheduled meetings with clients to review a comprehensive performance report. Further, NCA’s principals and staff are fully committed to making themselves available to respond to client questions and input.
In performing these functions, NCA should be viewed as the “conductor of an orchestra,” prudently and knowledgeably recommending investment companies and/or managers (e.g., stock and bond money managers, investment bankers, insurance companies and commercial bankers) who can provide products and services consistent with the goals and objectives of the diversified portfolio designed by NCA. Additionally, multiple sponsors are selected based upon a careful analysis of track record in their respective areas of expertise. By adhering to the above disciplines and adding in our 30 years of experience, we strive to make your relationship with NCA rewarding.