Professional StrategiesThe bridge to your financial future
Republic Bank believes creating any great structure is dependent on a comprehensive blueprint and the skill of the craftsmen hired to implement it. Investment Policy Statement ” or an “ Investment Objective Statement .” This document represents the foundation of your plan and clearly describes: 1.) the purpose of the portfolio; 2.) how it will be structured; 3.) the risk factors that are acceptable and those that are to be avoided; 4.) and the responsibilities you and your investment professionals will share over time The Investment Policy Statement is integral to the construction of the portfolio portfolio in meeting your objectives over time. On the following pages, we will outline the key components of our investment process. It is our goal to design a route and structure a portfolio that will deliver you to your ultimate destination while attaining the many goals you may have along the way..p. 1
Drawing the blueprintYou and your Republic Bank Investment O cers will engage in an extensive “People with clear,discussion about your goals and aspirations for the future, and the role your written goals, accomplishinvestment portfolio will play in helping you achieve those objectives. Through far more in a shorter perioda series of thought-provoking questions we will, together, clarify what is truly of time than people withoutimportant to you, de ne your tolerance for taking risks in your portfolio, and them could ever imagine.”identify your nvestment time horizons. Brian Tracy,The results of this analysis will be converted into your Investment Policy Statement(IPS) which will be used as the “blueprint” for the construction of your portfolio. Best-selling Author andThe IPS will be referred to on a regular basis and is the cornerstone for ensuring International Speakeryour investment portfolio remains on track to meet your stated objectives. Atleast annually, the IPS will be reviewed and, if necessary, adjusted to accountfor any life changes or events that occur which may have not been known orcontemplated at the time it was originally written. The loss of a family member,a dramatic change in income, or an unexpected opportunity to sell a large assetor business interest may alter your time horizon for such things as retirementor perhaps the purchase of a vacation home. Whatever the future may hold, aregular review of the original IPS is a good discipline, and one that is embracedby the Republic Bank team.Once we’ve developed your IPS, the next step is to put it into action. Building asuccessful investment portfolio requires four fundamental activities:Constructing the portfolio Determining your investment time horizonsSelecting the right professionals to manage your assetsMonitoring and reporting on performance p. 2
Time Horizons The length of time you have to let your portfolio work for you has a direct bearing on the likelihood it will achieve your stated objectives. A short time horizon with overly ambitious goals may require your product to assume a level of risk that is outside your comfort zone. If you have a longer time horizon, periods of high returns tend to offset periods of lower returns and the level of volatility in the portfolio is reduced. Traditionally, different time horizons tend to dictate the investment characteristics of a portfolio: Short-term Mid-term Long-term SHORT-TERM (less than 3 years): Emphasis on income with low volatility MID-TERM (3 to 7 years): Income with some growth LONG-TERM (over 7 years): Growth The Optimal Investment Characteristics Change with Time RISK AVERSE RISK SEEKING LOW VOLATIVITY HIGH VOLATIVITY HIGH RETURN LOW RETURN GAINS INCOME ILLIQUID LIQUID TAX EFFICIENT TAX INEFICIENTp. 3 | The bridge to your financial future
Managing RiskThe reality is that most investors tend to have some mix of all three time horizonsand investment assets need to be managed to meet the needs of each. Onemethod of achieving this goal is to strategically allocate portions of the portfolioto different types of securities – stocks, bonds and cash or cash equivalents.Further diversification can be achieved by investing in different classes of stocks(small-, mid- and large cap, growth, value, and core) and in different industrysectors; short, medium and long duration bonds; and non-North American markets.By structuring the portfolio with specific investment characteristics in mind, weeffectively diversify your holdings to deliver investment results consistent with yourexpectations.Operating on the premise that not all types of investments rise and fall at the sametime, prudent asset allocation also serves to reduce the overall level of portfoliovolatility. Why Asset Allocation Is ImportantContributing Factors to Portfolio Performance Surprises should be delivered on holidays or91.5% Asset Allocation 1.8% Market Timing other special occasions such4.6% Security Selection 2.1% Other as birthdays, not as part of the investment process. We believe our asset allocation methodologyof characteristic- based, structural diversification limits the possibility of investment surprises. Providing you with a smoother ride and a more predictable investment outcome is what we strive to accomplish.This is for illustrative purposes only and not indicative of any investment.An invenstment cannot be made directly in an index.Past performance is no guarantee of future results. 3/1/2005.Source: Financial Analysts Journal, B.G.P. Brinson, B.D. Singer and G.L. Beebower, May – June 1991. p. 4
Selecting Craftsmen The third basic premise for building a successful investment portfolio is hiring the right people. Utilizing a true “open architecture” approach, we select who we believe to be the best investment team for each asset class in your portfolio. Based upon extensive research and careful screening of professional asset managers, mutual fund companies, and individual securities, we assemble a portfolio of proven investment professionals that specialize in a particular asset class or sector of the market. In e ect, your Republic Bank professional acts as the general contractor for your investment program, and is responsible for hiring the characteristic to the portfolio. The process of investment manager evaluation is comprehensive and on-going. A strict due diligence practice leads to a thorough understanding of their investment approach and philosophy. The philosophy also uncovers true strengths and weaknesses. This knowledge enables us to monitor their manage an asset class on your behalf and deliver the needed characteristics associated with it. Monitoring and Reporting The fourth key element of a successful investment portfolio is a systematic process Ongoing analysis of the managers we have selected and their contribution to the overall portfolio is critical to the success of your investment program. On a regular basis, all members of your investment team are evaluated against their appropriate benchmarks, peer groups, and absolute performance. Any unforeseen change in personnel, investment philosophy or lack of performance could result in a re-evaluation of that manager. If we deem that a change or adjustment is needed, Republic Bank will make the most appropriate recommendation and implement the change. professionalism and investment performance consistent with their stated objectives for many years. Manager turnover is limited and is usually a function of a special the turnover will be minimized. Republic Bank’s manager due diligence process is quite thorough and has resulted in relatively few manager changes over time. p. 5
Moving Forward “Anything worth doing is worth doing well”A brief but informative meeting with your RepublicBank Investment O cers will quickly impress upon youthat our wealth management process is comprehensive,is professional.And after all, isn’t that what you need?Let us help you build your bridge to a successful p. 6
Building your bridge to a successful financial futurePlease contact us to explore how we can put our experience to work for you. Wealth Management • 502-562-8899 Tammy Nucci, CTFA Joe Sutter Vice President, Trust Officer Vice President, Trust Manager601 West Market Street • 4th Floor 601 West Market Street • 4th Floor Louisville, KY 40202 Louisville, KY 40202 Direct Line: 502-560-8681 Direct Line: 502-560-8634 Email: [email protected] Email: [email protected]
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