Strategic Portfolio Diversification requires deep research across 11 domestic equity sectors, analysis of both developed markets and emerging markets, as well considerations regarding domestic and international fixed income investment opportunities.

Our highly specialized Investment Team includes 6 CFA Charterholders (2 of whom hold the dual CFA, CFP® designations) who utilize industry-leading research, market data, and academic studies from independent research firms such as Strategas Research Partners, Morningstar, and Bloomberg to help formulate an accurate investment portfolio analysis.

Each investment account at EP Wealth Advisors is assigned a dedicated Portfolio Manager to ensure that a single person remains responsible for ongoing management and account oversight.

The Portfolio Manager works with the asset allocation determined from the financial plan, and makes decisions related to actions such as account location (based on tax efficiency), tax management, and client mandates (e.g., restricted securities, liquidity management).

Additionally, each of our analysts is responsible for reporting on specific areas of coverage across sectors and asset classes to our Investment Committee, an internal group comprised of seven voting members that meet weekly to act as checks and balances for the client’s portfolio.

Market updates, and any potential changes in investment strategy are communicated to your EP Wealth Advisor via a weekly firm-wide conference call.

All financial markets follow a cycle of growth and contraction, and as circumstances change, we have to adjust our investment strategy to ensure optimal growth. These adjustments come as a result of monitoring market trends and historical data.

Typical Business Cycle

Diversification in investing is important because it allows us to significantly limit the possibility of one poorly-performing investment materially impacting your portfolio.

An example would be in 2008, when nobody wanted to own bank stocks. We were able to buy a Financial ETF as a placeholder, allowing us to take exposure to the sector we felt was undervalued without assuming the huge risk of purchasing a single company’s stock, which could have led to disastrous consequences had the wrong bank been picked.

In addition, by actively managing stocks, we can more opportunities to save on taxes via the strategy known as tax-loss harvesting. For example, there may be times when certain stocks in your portfolio are down, and we can sell those stocks to offset the taxable gains from other parts of your portfolio which are performing much better. We can then buy an ETF to serve as a placeholder for that underperforming sector or position until the Wash-Sale Rule expires.

In determining the companies that may be appropriate for our investment recommendations, we utilize a quantitative screen to limit the number of potential candidates in any one sector. This allows our analysts a greater ability to look deeply at the fundamentals of a few names.

Investment Breakdown

In order to manage risks, our advisors follow strict guidelines originating from Nobel Prize-winning modern portfolio theory (1970-2015):

By balancing investments in stocks and bonds, we can create a custom-tailored investment plan based on your own individual financial goals and needs.

Equity Sector Allocation

Our diversification strategy applies not only to the types of investments we pick, but also to the sectors those investments are made in.

Bond Selection

Our bond portfolios are constructed to provide income and minimize portfolio risk and volatility.
At EP Wealth Advisors, we emphasize:

• Duration management, including laddered, barbell, or bullet maturities to minimize risk
• Strategic positions along the yield curve
• Sector and quality diversification
• Close monitoring of changes in bond/credit ratings

Mutual Funds

Our mutual fund portfolio allocation process is broken down into two stages: Initial Due Diligence and Ongoing Due Diligence.

During the Initial Due Diligence phase, outside managers are typically utilized in niche and/or less efficient markets where a competent team can add value relative to passive investments.

Our search criteria include the following elements:

• A transparent and consistent process
• Reasonable fees
• Manager tenure
• Performance track record relative to peers and corresponding benchmarks

In order to ensure that select mutual funds are performing to expectations, meetings are held during the Ongoing Due Diligence phase with outside fund managers and representatives to review performance and confirm no significant changes to process or personnel have taken place.

Contact EP Wealth Today

To learn more about how EP Wealth Advisors can help you reach your financial goals, please call give us a call at 1-800-272-2328 or visit our Contact an Advisor page to submit your information.