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OUR PROCESS
Step 1
- Client data gathering
- Discussion of client objectives and goals
- Completion of risk tolerance questionnaire
- Discussion of estate planning desires and tax planning needs
Step 2
- Establish risk tolerance and compatibility with desired rate of return
- Run asset allocation model to determine the appropriate blend of asset categories
- Selection of the appropriate stocks, bonds, real estate, trust deeds, and no load mutual funds
- Implement the portfolio construction process
Step 3
- Continual monitoring of performance
- Compare target rate of return with actual return
- Implement necessary allocation changes of portfolio to continue adding return and minimizing risk
- Evaluate changes in current economic conditions and their impact on the portfolio
- Generate quarterly performance reports
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OUR PHILOSOPHY
The investment philosophy at Reedy Asset Management, Inc. is based on
the strong belief that asset allocation is the key to long term
performance.
Asset allocation is the process of selecting different asset
categories (such as stocks, bonds, real estate, trust deeds, cash, etc.)
and diversifying within these categories to create a portfolio that
maximizes return while matching the risk tolerances of the client.
The process includes an evaluation of the relationship of each asset in
the portfolio to determine the optimal portfolio for a client's risk
tolerance.
The chart above illustrates that asset allocation is the key to long
term performance. The next question becomes how to properly contruct and
allocate a client's portfolio.
Our approach to money management is focused on constructing portfolios
that will achieve a client's longterm objectives within specified risk
parameters. If over 90% of a portfolio's performance is determined
by asset allocation, then it should be at the asset allocation and investment
policy level that investors address the issues of risk and return.
The optimization process is illustrated in the examples below. The
Sample Portfolio shown comprises 60% large stocks and 40% bonds. Its annual
return, based on historical figures, is estimated at 13.7%
with a standard deviation (a measure of volatility or risk) of 10.3%.
In Optimized Portfolio One, the asset allocation has been changed to
maintain the same rate of return but the risk factor is lowered to
9.0% (a reduction of about 12.6%). In Optimized Portfolio Two, the asset
changes are designed to improve return, while maintaining the
same risk factor. In this example, the return was improved to 15% (an improvement of 9.5%).
These results are based on historical figures and do not necessarily represent future results.
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OUR IMPLEMENTATION
After the optimal stock, bond, real estate, trust deeds and cash allocation is determined,
portfolios are further diversified. Stocks are selected from
different sized companies within different industries. With bonds, differing maturities are selected to lessen
the impact of interest rate changes. An emphasis is placed on safety
of principal by selecting only highly rated bonds. No load mutual
funds are chosen with varying investment approaches (growth
vs. value). .
Additionally, Reedy Asset Management has created a recommended list of stocks, bonds, and
mutual funds. The list has been developed by use of fundamental market
analysis, computer research tools, telephone conversations
with corporate investor relations and CFO's of targeted companies, and
daily contact with various money managers. Among other things, stocks are screened for
low price to earnings ratios, high revenue growth rates, and
sustainable profit margins.
Individual portfolios are designed with the client's tax
circumstances in mind. Because each portfolio is unique, Reedy Asset Management has the
ability to maximize the tax effectiveness of the account.
By creating a highly diversified portfolio, Reedy Asset Management,
Inc. is committed to building and preserving wealth while minimizing
risk.
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Copyright © 2008 Reedy Asset Management, Inc. All rights reserved
The information on this site is not intended to be a substitute for specific individual tax, legal or investment planning. It is provided
for general information purposes.
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