Investments are the most fluid portion of a financial plan. Team Financial Strategies will spend ample time analyzing investments and judging the fit of an asset in a client’s portfolio. TFS will help clients stay current on market and economic activity while implementing, monitoring, and revising their investment portfolio.
TFS believes the successful investor is one who finds investments that are undervalued or out of favor while having solid prospects and fundamentals. Client’s portfolios are not set in a static asset allocation. Portfolios are diversified between various asset categories based on a risk/reward analysis.
TFS recognizes that fees play an important role in a client’s rate of return. Therefore, we will never invest a client’s money in load funds and will evaluate the cost benefit of a mutual funds annual expense ratio before investing. Some funds will have transaction fees depending on the fund family’s agreement with the custodian.
Diversification and Correlation
TFS believes that the correlation of assets in your portfolio is vital to diversification. Correlation is measured in the range of -1.0 to 1.0 and measures how an asset moves in relation to another asset in the portfolio. As expected, assets can be corrected in one of three general ways:
- negatively, or
- no correlation
If two funds have a correlation of 1.0, then as Fund A increases, Fund B increases at the same rate. At 1.0 they have a “perfect positive correlation”. As the scale slides closer to zero, they are less correlated to each other. At 0, there is no correlation between the two assets.
As the correlation falls into the negatives, the assets move in opposite directions. Those with a correlation of -1 have a “perfectly negative correlation” and therefore would entirely “hedge” out any gains or losses.
Why is This Important?
Over time and in various market cycles, investment correlations will vary. In analyzing risk, it is important to know if during one period or another you have the risk of either having too high positive or negative correlations in your investment portfolio.
TFS Quarterly Analysis
Below are the previous quarterly reports provided by Team Financial Strategies investment committee. This report will give you additional insight on our philosophy and expectations for your assets.