The Aventine US Total Wealth Strategy is our core portfolio for separately managed accounts following a “growth and income” mandate and using the USD as their reference currency. It is based off of the flagship all weather Total Wealth portfolio that has been used by Canadian high net worth investors since 2009.
Total Wealth is an actively managed, endowment-style balanced portfolio that offers clients diversified exposure to a broad variety of global markets and asset classes. The primary goal of this strategy is to outperform our peer index on a risk-adjusted basis while minimizing the potential for large portfolio losses.
The Total Wealth Strategy is a turnkey full portfolio solution for affluent and ultra high net worth investors wishing to delegate their day-to-day investment decisions to professional management. This is an all-weather strategy with a demonstrated ability to provide consistent, positive returns across a variety of market environments and offers a proven solution to the challenges of volatility, correlation, and low forward returns experienced by many investors today. This portfolio is optimally suited for liquid investment portfolios in excess of $5,000,000.
The investment approach employed by this strategy incorporates elements of both economic and fundamental analysis. We utilize macroeconomic research to assess the relative attractiveness of major global investment markets and determine our portfolio allocation to broad asset classes such as cash, bonds, equities and alternative investments. Within each asset class we then apply our quantitative and fundamental research methods to identify specific opportunities for investment. To avoid large portfolio losses, we reduce market exposure in this strategy when we identify negative trend shifts in the areas of investor sentiment, market liquidity and economic data.
Capital allocation is the number one priority of the Strategy’s long term view to portfolio construction and requires understanding the balances of risk, expected return, correlation and liquidity at play in each are of the portfolio. The Strategy’s capital allocation activities begin with an analysis of the global macroeconomic environment which is used in concert with our internal asset class expectations to derive our 12-18 month strategic asset allocation. Tactical deviations are permitted on a discretionary basis to pursue short-to-intermediate market dislocations and to scale the portfolio’s hedging activity up or down.
Security selection within each major asset class allocation of the Total Wealth strategy is pursued in accordance with the bottom up research principles outlined on the “Investment Process” tab in the Aventine US Equity and Aventine US Income sections of this website.
In addition to internally managed strategies the Total Wealth Strategy may commonly allocate 25% or more to outside, third party managers on a sub-advisory basis to provide alpha-oriented exposure to asset classes that we deem to present attractive opportunities, but for which we possess no internal expertise. In these situations, we pursue enhanced due diligence of the investment strategies and operational capabilities of the subadvisor, including external reference of management character. All potential subadvisors will have external, third-party service providers for all major counterparty relationships – custody/prime, audit, trustee (if applicable), and have a well segregated and institutional quality compliance function.
The Aventine Total Wealth Portfolio is designed to provide diversified exposure across – but concentrated exposure within – multiple global asset classes. Such a framework reduces the reliance on systematic, equity-like market risks and puts more emphasis on performance driven by targeted, idiosyncratic risk.
The Total Wealth Strategy has no mandate to be fully invested and may hold large cash balances. In addition we are authorized to utilize several forms of derivative and ETF hedging, including the purchase and/or writing of options contracts in various forms and structures (eg. “spreads”), and by owning ETFs which represent inverse exposures to equity indexes, commodities or other assets.
Risk management activities, such as cash management and hedging which are undertaken by the fund are driven by the firm’s overall outlook on the investment environment and financial conditions as indicated by our PRESERV risk model. The Strategy’s “Beta” exposure is scaled up and down in accordance with this model output and the collective input of the firm’s investment committee.
The Aventine US Total Wealth Strategy is managed by Andrew Shortreid and James Telfser. Since inception the Strategy has consistently outperformed both its active and passive comparables while realizing low correlation and volatility relative to global equities. The US Total Wealth Strategy targets annualized returns of 8-10% per year or better with no peak-to-trough losses greater than 10%.
The below information is current as of October 31, 2017.
The performance presented has been generated in non-USD local currency terms and is calculated net of fees and expenses but gross of an investor’s individual hedging costs back to a USD (or any other) reference currency, which we estimate to be 0.5% per annum.