The defining feature of the Elliott Cove Portfolios is that they are constructed using highly efficient index-like funds, in a process we term Disciplined Asset Allocation.
This process accepts the efficient market hypothesis – that financial markets are highly efficient and it is a loser’s game to try to ‘beat’ them. We make this work for us, rather than attempting to circumvent it.
Disciplined Asset Allocation utilizes principles of diversification to lower risk while attempting to achieve superior risk-adjusted returns. Diversification, in this process, means far more than simply a collection of unrelated securities; it means carefully constructing a portfolio to achieve the risk-return characteristics, over the long term, that meet the needs of a wide range of investors. We monitor and rebalance the portfolios to keep them in line with their intended structure, hence the term ‘disciplined’. Our goal is to achieve superior returns with lower risk.
The use of highly efficient index-like funds to gain diversification and reduce costs
We utilize a blend of many different index-like funds to construct a portfolio for an investor’s particular appetite for risk. Our universe includes index-like funds of large cap growth stocks, large cap value stocks, small cap growth and value stocks, foreign stocks, real estate funds, and bond funds. This universe consists of more than 125 highly efficient, low cost, index-like funds from which to construct the portfolio that is right for the investor.
Acceptance of market returns for different asset classes (stocks, bonds, real estate, cash)
Over the long term, we do not believe market returns can be beaten, after adjusting for risk. This does not mean that all returns are the same. It means that those willing to accept greater risk (volatility) will be rewarded over the long run, while those who desire greater stability must accept lower returns.
Monitoring and rebalancing portfolios to maintain the proper risk profile
After we determine the correct portfolio for an investor, our job is still not done. We stay abreast on the latest research findings to make sure the portfolios are structured as well as possible. We also rebalance the portfolios based on performance.
When an investor’s needs change, we are there to make the adjustments needed to suit the new requirements.
For current YTD Factsheet covering all our portfolios, click here