STRATEGIC PORTFOLIO
A tax efficient and low cost investment alternative

Investing for Passive Investors

Strategic Portfolios are designed for investors who prefer a more passive strategy than our tactical investment approach. They are low cost and tax efficient. There are four strategies designed to match an investor's tolerance for market volatility. They can be used by themselves or in combination with our tactical portfolios to create a solid investment plan.

These portfolios work to match investors' goals with their tolerance for risk. They are managed in a passive format and provide varying degrees of exposure to the volatility of securities markets. Strategic Portfolios will hold various combinations of securities that track the following asset classes and corresponding indexes:

  • Large U.S. stocks represented by the S&P 500 Index
  • Small U.S. stocks represented by the Russell 2000 Index
  • International stocks represented by the Morgan Stanley EAFE Index
  • Intermediate Government Bonds represented by the Lehman Brothers Intermediate Government Bond Index
  • 90-day U.S. Treasury Bills

The Strategic Portfolios are comprised of the following four strategies:

Aggressive Growth

This portfolio seeks to maximize capital appreciation by allocating a higher percentage of the portfolio to the highest-ranked asset classes. It is suitable for investors that can tolerate higher levels of market volatility and have a longer-term (more than five year) investment horizon.

Growth

The primary emphasis of this portfolio is capital appreciation. It is suitable for investors with a long-term (more than five year) investment horizon and can tolerate average levels of market volatility.

Balanced

This portfolio seeks long-term capital appreciation and current income. It is suitable for investors that desire a less volatile portfolio and/or may not have a longer-term investment horizon but would still like to have long-term capital appreciation.

Conservative

The Conservative Portfolio places primary emphasis on current income and secondary emphasis on capital appreciation to provide some growth. This portfolio is suitable for investors with a shorter-term investment horizon and a desire for a low degree of volatility.

Investment Vehicles

These portfolios use exchange traded funds (ETFs) and mutual funds that track the indexes listed above.

Management

Each of the tracked asset classes is ranked, and the portfolios are created by assigning different weights to the rankings based on volatility. The portfolios are rebalanced once a year  to avoid any short-term capital gains. For example, the growth portfolio has an allocation of 60% to the top ranked asset class and 20% each to the second and third.  At the end of each year, the asset classes are ranked and the portfolios adjusted accordingly to reflect the new rankings.

Performance

These portfolios were introduced in July 2007 and do not yet have actual performance numbers. Please contact Paragon if you wish to see hypothetical backtested performance that does not represent actual performance along with all of the appropriate disclosures.