Q: CLS has developed 10 new strategies, what was the driving force behind the expansion?

When you walk into our building, the first thing you see on the wall is the saying “We empower investment advisors.” In short, these new strategies will help us reach out and empower more advisors to help more investors.
One big consideration is that many advisors either want more control over the portfolio construction, or they have clients with specific concerns or issues that need a more focused solution. These portfolios will help serve those needs.

Q: How do the strategies fit in with CLS’s risk budgeting methodology?

We continue to believe in risk-managed, balanced portfolios. Although these new strategies will not be risk-budgeted, we will still know these portfolios’ risk characteristics (including Risk Budget scores – how could we not?), and manage them according to their mandates. Bottom line, we want to make sure these new portfolios are as dependable as our Risk-Budgeted portfolios have been.

Q: Does adding these new strategies change CLS’s belief in risk budgeting?

Absolutely not. We still firmly believe in, and invest in, Risk Budgeting. We still believe it’s a solid way to build risk-managed, balanced portfolios. The only trump card in our organization over our belief in risk budgeting is our belief in empowering investment advisors to help investors with risk-managed, balanced portfolios. These new strategies will help us do just that.

Q: What advantages do these new strategies offer advisors? Clients?

CLS Active consists of satellite portfolios that will be used as a kind of bolt-on to core, balanced portfolios. These can be used either by advisors who want more control over the portfolio construction, or by advisors looking to address a specific market exposure or concern.
CLS High Quality Strategic portfolios may hit a few buttons for advisors and investors. First and foremost, they are passively managed. Changes are not made due to market trends, valuations, or outlooks. In turn, they will have lower turnover and lower costs. Also, since they are composed of higher quality stocks and bonds, they will likely hold up better in bear markets for stocks.

Q: Do you see more expansion in the future?

If our clients want us to expand, we will likely expand our offerings. Again, we are here to empower advisors to help more investors.

Q: How do adding these strategy offerings help to separate us from other third party money managers?

There are a lot of rock-solid investment managers out there. Most of them have a certain approach to managing money though, either strategic (i.e., passive, static portfolios) or highly tactical (i.e., portfolio risks and asset allocations can change dramatically). At CLS, we will now be able to offer an entire suite of ETF portfolios that span the continuum of investment management options, ranging from strategic to risk budgeted to tactical to active.
We are able to make these additions now that our investment team and capabilities have essentially doubled over the last couple of years.

A client’s risk budget is derived from the client’s specific answers to CLS’s Confidential Client Profile questionnaire, which establishes the client’s financial goals, ability to handle risk, and overall investment time horizon. The individual client risk budget is expressed as a percentage of the risk of a well-diversified equity portfolio.

Treasury Securities are securities issued by the U.S. Government.  Generally issued to fund its operations and backed by the full faith and credit of the U.S. Government, treasury securities are considered extremely low risk investments.  Treasuries may include: Treasury Bills (T-Bills), short-term debt instruments which mature one month to one year after issue; Treasury Notes, which mature at one to ten years after issue; Treasury Bonds (T-Bond), marketable, long-term fixed-interest debt instruments with a maturity over ten years; or Treasury Inflation Protected Securities (TIPS), long-term debt instruments that mature between five and twenty years and are indexed to inflation in order to shield investors from inflation risks.  The return on treasury investments is measured by the Treasury Yield.

High quality investments are investments made in companies and/or products with outstanding characteristics.  Although high quality investing attempts to eliminate as much risk as possible, risk is always inherent in any investment methodology.

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