Tactical Total Core
Municipal Portfolio

Seeks to effectively capture market returns while minimizing volatility Allocates the fixed income component to municipal bonds appropriate for tax-sensitive investors


Highlights

  • Stock and bond portfolio designed to be the foundation of an investor’s overall portfolio to pursue long-term financial objectives
  • Strategic stock/bond allocation is reviewed annually, and adjusted if necessary, to better respond to changing market conditions
  • Tactically allocated equity (using Equity Risk Management Strategy) seeks to provide downside protection and volatility control without curtailing upside potential
  • Portfolio is diversified across asset classes, active and passive investment approaches, domestic and international stocks, investment styles, and market capitalizations
  • The actively managed U.S. equity component seeks to outperform by opportunistic stock selection and portfolio tactics
  • Adheres to a research-based, rules-driven investment process implemented using quantitative models to impose discipline and consistency to investment decisions
  • This strategy invests in exchange traded funds

Portfolio Allocation

Equity Allocation 60%

  • Emphasizes diversification, volatility control, and excess return potential
  • 20% of the fully invested equity is allocated to international stocks (equally between developed and emerging markets)
  • The actively managed All-Cap Blend Portfolio represents the U.S. equity portion
  • Equal-weight positions in 50 stocks across 10 sectors
  • Uses EquityCompass’ quantitative models to identify stocks with favorable relative value, price momentum, quality, and mispriced as a result of investor over/underreaction
  • Rebalanced monthly to attempt to optimize exposure to drivers of excess returns
  • Allocations to U.S. and international equities are reviewed annually and adjusted if necessary

Municipal Bond Allocation 40%

  • Uses ETFs and closed-end funds that invest in municipal bonds, thus providing liquidity, cost efficiency, and diversification across securities and maturities
  • The income produced by muni bonds is exempt from federal taxes, and in some cases, state and local taxes
  • Muni bonds used in the portfolio have historically been high quality, with a low default rate and low volatility compared to other bonds
  • Munis may help diversify a portfolio because they have a low or negative correlation to other asset classes