Our Investment Philosophy
Brecken Capital Advisors, LLC uses a top down investment approach based on our own research on macro economic & financial market trends. Once we formulate our investment framework which outlines our major assumptions in the coming year it is used as the basis to maintain our portfolios. We review both economic, industry & company specific fundamental developments daily to determine their impact on client portfolios. Upon determining a client's risk tolerance we then implement a portfolio strategy. Most often that portfolio strategy is implemented using BCA's internal model portfolios (using BCA chosen ETFs & individual stocks). However, we offer the client the option to replicate a model portfolio using third-party managed funds (ie mutual funds) as well. The goal of the portfolios we choose is to reduce downside risk while maintaining opportunities for growth. We design our portfolios so as to avoid taking significant directional sector risk while always providing a buffer for downside protection. The potential advantage of building & managing our own model portfolios is we can better manage risk to potentially preserve and growth wealth.
Our internal model portfolios ranked from highest to lowest risk are as follows: Aggressive Growth, Growth, Conservative Growth, Income, Conservative Income, Ultra Conservative Income & Ultra Conservative Income w/ bond latter. The allocations of the seven model portfolios currently maintained are outlined below. These categories and risk rankings will change from time to time. We implement investment policies and rules to limit the amount of exposure to any one stock sector and review these rules regularly to ensure adequacy. We generally use publicly traded ETF's, but may incorporate individual stocks/bonds in up to 25% of any portfolio. We seek to use ETFs that have adequate liquidity, are low cost and provide sufficient options for diversification. Investment Portfolios are generally updated several times a year depending on market conditions.
The objective of “Growth” funds, when used, is to participate in growth but maintain positions or asset classes (including cash) which have a lower market correlation and in turn potentially providing some downside protection. Thus, the overall objective of preserve and grow assets and not necessarily to maximize performance.
The objective of “Income” funds, when used, is to preserve and grow assets, but with much greater emphasis on preservation and utilizing more value-oriented asset classes. We may also use a “Ladder” fund that has the additional objective of inflation protection.
The “Investment Framework” section of BCA’s website defines what a Framework is and how it gets incorporated into our model portfolios. Contact us for specifics as to our current Framework.
Note: Targets are depicted as absolute percentages for illustration only. All allocations targets maintained within plus or minus 5% of these stated amounts. Meaning for example for Aggressive Growth allocations are actually 90-100% Equity & 0-10% Bonds/Cash. Fund “Target Allocations” are just that. Actual allocations may differ for certain periods from target allocations particularly if we believe economic/market conditions warrant risk reduction. As a result, cash levels may be elevated in periods where we deem market risk/reward unfavorable.