Promus Capital advises its clients to diversify risk factors and build a portfolio that is substantially different from the market - away from the herd.
We believe superior long‐term, risk‐adjusted portfolio performance is driven by a combination of proper asset allocation, manager selection, and recognition of opportunistic investments in both the traditional and alternative asset classes. While true diversification or exposure to a wide range of independent risk factors is difficult to achieve, it has the benefit of reducing a portfolio's volatility while maintaining the expected return.
The traditional approach to asset allocation generally fails to meet the needs of the families we serve. Traditional asset allocation places a large emphasis on equities and fixed income with a relatively small weight on the alternative asset classes, resulting in portfolios that are highly correlated to the equity markets and exposed to excessive volatility and large potential drawdowns. By emphasizing alternative assets, our approach produces greater diversification, less correlation and lower volatility over a full investment cycle.