Austerra provides comprehensive portfolio management solutions to its Investment Management Clients. Custom investment portfolios are constructed based on a number of factors in a client’s life that include much more than merely return objectives. The critical details of each client’s financial situation, along with their corresponding investment strategy, are documented in a personalized written Investment Policy Statement.
Investment portfolios are strategically diversified across a number of asset classes, both traditional and alternative, to achieve the desired risk/return profile for each client. In order to reduce risk, Austerra will often construct portfolios around proprietary funds that perform independently of the stock and bond markets. The ability of the private funds to deliver positive returns regardless of stock and bond market conditions introduces a level of diversification to client portfolios that is unachievable using public securities alone. This added diversification is designed to provide an element of stability to the portfolio and lead to more consistent returns.
As a simple illustration, if a portfolio were allocated entirely to the S&P 500, its results would mirror those of the S&P 500. Therefore, if the S&P 500 declined by 20%, the portfolio would also decline by 20%. However, if only 50% of the portfolio were allocated to the S&P 500 and the other 50% were allocated to investments that returned 8%, then the portfolio as a whole would decline by only 6%.
While this illustration is extremely basic, it does highlight the benefits of diversification. The problem is that during periods of severe economic stress virtually all publicly traded securities decline in value and the risk reduction benefit of traditional diversification vanishes, just when you need it most. This is why Austerra believes it is critical to allocate a portion of most portfolios outside of the public stock and bond markets in order to help preserve principal during periods of economic weakness.
Austerra’s positioning as an independent Registered Investment Advisor allows us to source investments anywhere in the world, many of which are not available to the general public. This freedom enables our clients to access top tier investment talent and opportunities.