Evolving the 60/40 Mentality: A Risk-First Portfolio Approach

The static approach to risk allocation is showing strain. Financial advisors are finding it harder to balance a client’s risk and return needs. The traditional discussion around the right ratio of equity and fixed income is finding it hard keeping up with an uncertain and ever-changing risk landscape, especially with all markets experiencing extremes in valuation.

In the upcoming webcast, Evolving the 60/40 Mentality: A Risk-First Portfolio Approach, Robert Kuftinec, Managing Principal, Auour Investments; Joseph Hosler, Managing Principal, Auour Investments; and Matthew Bartolini, Head of SPDR Americas Research, State Street Global Advisors, will highlight the Auour Regime Model, a unique approach to portfolio management that constantly measures the risk profile of the market and blends fundamental investment principles with quantitative analysis to determine which assets to be in and why.

According to Auour Investments, empirical evidence suggests that investors become risk-adverse out of regret, and often at the worst times. Consequently, Auour developed the Instinct Strategies to drive superior performance by protecting wealth during market panics in a bid to eliminate said regret.

The Auour Instinct Strategies are built on decades of institutional investment management and are designed to participate in rising markets while protecting downside risks. Through efficiency of exchange traded funds, Auour focuses on factors that have been shown to drive investment performance, including market participation, asset allocation, and expense management.

“Auour differentiates itself through the use of the Auour Regime Model,” according to Auour Investments. “This model identifies the various market regimes and dynamically allocates assets to align with market conditions. This process allows us to look at the world from both an asset allocation and a market regime perspective. By separating the two decisions, we believe we offer a more durable solution to financial advisors to protect client assets during down markets and to maintain performance in rising markets.”

Specifically, Auour maintains a proprietary multi-factor model that analytically characterizes markets across a spectrum of risk. Through a combination of fundamental and technical inputs, Auour takes stock of the investment environment and adjusts the asset allocation to best fit the market conditions. These factors include observing the movements of the various asset classes that exist around the world, the ways they tend to interact with each other, the liquidity and changing complexion of corporate financing, the identification of the investment styles driving market performance, and asset valuation levels.

Financial advisors who are interested in learning more about risk management can register for the Thursday, March 4 webcast here.