Investment Philosophy & Methodology

We know how challenging it can be to accumulate personal wealth, therefore, preserving your capital is always on our minds as we construct client portfolios. Our goal is to construct well-diversified portfolios that perform solidly in good markets, but can also successfully weather volatile markets. We focus on choosing investments with the best risk/reward characteristics.

Asset allocation - Asset allocation is a crucial first step in creating a well-diversified portfolio. Asset allocation is like an investment road map. Without it, we don’t know where we’re going. Asset allocation is simply deciding how much of your portfolio you will invest in stocks, bonds, cash, real estate, commodities and other alternative investments. It is not the selection of a particular mutual fund or stock. How important is asset allocation? Key investment studies show that over 90% of portfolio performance can be explained by asset allocation. Therefore, it is of critical importance that your asset allocation is consistent with your long-term life and investment goals. We believe in setting a target asset allocation for each client and rebalancing portfolios periodically to meet this target.

Diversification - Diversification is a technique that reduces risk by allocating investments among various financial instruments, industries, countries and other categories. It aims to maximize return by investing into different areas that would each react differently to the same event. Although it does not guarantee against loss, diversification is the most important component of reaching long-range financial goals while minimizing risk.

Most investment portfolios are not properly diversified - Typical wealth management firms diversify client portfolios by spreading out investments across only the U.S. stock and bond markets ignoring emerging market stock and bond markets, international bonds, hedge funds, commodities, real estate, private equity, etc. At Blue Sky, we design highly diversified portfolios that have exposure to many different asset classes with an eye toward tilting the portfolio to the areas of greatest opportunity.