Portfolio Construction

Portfolio construction and investment manager selection is both a science and art.

It is the linchpin to your success and the reason why so many look to Ellwood for advice. With customized strategies, fine attention to detail, and access to a range of instruments, Ellwood brings together all the critical elements.

Diversification, risk management and attractive risk-adjusted returns are among the objectives when building portfolios within the broad asset allocation categories. Portfolio construction means different things to different investors. We view portfolio construction as the implementation of investment manager structures, investment styles, and rebalancing parameters, in addition to considering complex issues for alternative investments such as vintage year diversification. Ellwood focuses on several criteria that are interrelated and customized to you, our client.

At Ellwood, we don’t believe that a ‘one-size-fits all’ approach is appropriate for our client’s portfolio construction.

You have unique circumstances and those should always be top of mind during the portfolio construction process. We work closely with you to customize each portfolio based on a number of factors, including:

  • Active vs. passive for public investments
  • Tracking error and active share among other risk metrics for public investment strategies
  • Correlation of excess returns of different investment managers
  • Style/factor exposures (large cap vs. small cap, value vs. growth. regional allocations)
  • Treasury exposure vs. spread sectors (corporates, high yield, etc.)
  • Duration management in the context of yield curve and economic cycle
  • Pacing and vintage year diversification for illiquid private investments
  • Active rebalancing strategies that promote selling high and buying low
  • Number of investment managers
  • Sustainable investing

By utilizing a combination of the strategies listed above, we create broad global diversification across traditional and alternative asset classes. It is a skill that Ellwood has honed over decades of experience.

Want to learn more about our portfolio construction services? Contact us.