RISK-BASED INVESTMENT MANAGEMENT

Valentine Ventures lives by one simple rule:  Don’t take on more risk than you need to.  The complexities of financial markets, as well as human emotions, can drive investors to misjudge and misappropriate their investment portfolios.

Risk Management

We begin by determining a client’s ideal asset allocation–how capital is allocated across the major asset classes (see examples below). Our modeling software analyzes your optimal portfolio allocation while assuming the least amount of risk necessary to achieve your objectives, given the constraints specific to your personal situation.

Within the investment portfolio, we endeavor to reduce risk through broad allocations to low-correlating investment classes. We invest across at least eight different asset classes and rebalance periodically, in an effort to smooth the overall return profile and reduce the effects of negative performance of any one class. Our proprietary portfolio structure includes the following asset classes:

  • U.S. Stocks
  • Foreign Stocks
  • U.S. Bonds
  • Foreign Bonds
  • Real Estate
  • Commodities
  • Volatility
  • Other Alternative Classes

Portfolio Construction

Valentine Ventures embraces the use of Exchange Traded Funds (ETFs) in client portfolios.  ETFs are now recognized as the ideal low-cost, diversified, and liquid way to access global asset markets of all kinds.

For asset protection and income production, Valentine Ventures structures a broad bond portfolio based on high-quality individual bonds and similar instruments.  The portfolio limits risk at several levels. Bonds are “laddered” by maturity to reduce “interest rate risk,” inflation-protection bonds are used to hedge against “inflation risk,” and only top-rated bonds are used to reduce “credit risk.” (Smaller accounts will use bond ETFs in place of individual bonds due to the constraints of constructing a ladder with less funds.)

The investment portfolio’s overall sensitivity to changes in the market, or Beta, is controlled so as to reduce exposure to risky assets once a protracted decline has been identified, as measured by proprietary technical analysis.