Integrated Investment Strategies
Integrated Process Our approach integrates actively managed portfolios using strategic and tactical asset allocation, customized investment planning, and both tax and risk management. This integrated approach to asset management is likely to provide superior long-term client outcomes. Each client, in conjunction with their advisor, can select any mix of assets that best meets the return objectives defined within the constraints (liquidity needs, tax issues, time horizon, unique circumstances, etc) outlined in their financial plan.
Proactive Tax Management All investing decisions are eyed through the prism of tax efficiency. Whether through household asset location optimization, capital gain and income management, legacy security administration or rebalance reviews, the investing process is grounded in the maximization of sensitivity to client tax circumstances.
Tailored Solutions Each client, in conjunction with their advisor, can select active, semi-active or even passive investment approaches, all allowing the maintenance of integration with their plan. A variety of investment products (Index ETF’s, Stable Allocation ETF’s, Fundamental Focus Models and Select Series Equity Portfolios) are available to accomplish stated allocation objectives.
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Portfolio Model Descriptions
FUNDAMENTAL FOCUS MODELS
Provides active portfolio management by combining strategic diversification with a tactical adjustment overlay designed to be proactive to prospective market movements. These allocation and adjustment decisions are predicated on our assessment of the macroeconomic environment, which identifies broad themes that ultimately allow for the formation of capital market expectations. This is an ongoing process and modifications to our allocations, and exposures, allows for an active investment program, designed to balance principal protection with growth, generating superior risk-adjusted returns over each full business cycle. Ongoing portfolio adjustments may include changes to asset class ranges (stocks, bonds, etc.), asset styles (large cap, small cap, international etc.), asset sectors (health care, technology, etc.) and industry (medical devices, software, etc.). INDEX ALLOCATION MODELS
Designed to offer fully passive, low cost, non-transaction fee exposure to a pre-defined, diversified set of asset classes, and styles. This approach is a fully-passive management philosophy, where no attempt to outperform any respective benchmark is made. Allocation decisions are aligned with long-term objectives where constant exposure to a pre-set allocation is maintained throughout all market cycles, with quarterly rebalancing. No active management is made, with return expectations and performance established only through asset allocation selection. Emphasis is placed on adherence to a long-term perspective, as outcomes can be impaired when deviations from allocations occur at inopportune moments in market cycles.
STABLE ALLOCATION MODELS
Designed to offer a semi-passive, lower cost, non-transaction fee exposure to a diversified set of asset classes, styles, sectors and industries. As portfolio diversification explains over 90% of the variation in portfolio returns, the stable allocation model will remain fully exposed to predefined asset class ranges over time, with rebalancing occurring quarterly. Tactical allocation adjustments to asset styles (large cap, small cap, international, etc.), sectors (health care, technology, etc.) and industries (medical devices, software, etc.) are implemented (as opposed to asset class i.e. stock, bond, etc.) which remains static. These adjustment decisions are made through top-down, macro-economic analysis designed to identify potential price opportunities over the intermediate term. By focusing on a longer time frame, the potential exists to outperform relevant benchmarks through fewer transactions and lower fees. MANAGED SELECT PORTFOLIO SERIES
Offers our clients the ability to custom design their portfolio composition through the selection of one or a combination of many portfolio strategies, all designed and managed to offer the best risk adjusted returns commensurate to their objective. Whether through all equity portfolios intended for high growth or income, through portfolios developed to satisfy capital preservation and income streams, or even portfolios created to take advantage of investor momentum or global macro themes, investors have the opportunity to mix any combination of portfolios to their own liking. The end result is a portfolio tailored to each investor’s specific preference, with each component actively managed in a manner consistent with its specific objective.
Portfolio Matrix
Asset Allocation ACTIVE
Security Selection
ACTIVE
PASSIVE
DEFINITIONS
PASSIVE
Fundamental Focus
Select Series
Tactical Asset Allocation
Strategic Asset Allocation
Manager-Based Security Selection
BerganKDV Security Selection
Stable Allocation
Index Portfolios
Dynamic Style & Industry Allocation
Strategic Asset Allocation
Index-Based Security Selection
Index-Based Security Selection
Tactical Asset Allocation – is a dynamic investment strategy that actively adjusts a portfolio’s asset allocation based on economic fundamentals and capital market expectations. This is in an attempt to improve risk-adjusted returns and is most closely associated with active management.
Strategic Asset Allocation – is a static investment strategy defined by the objective to maintain a consistent asset class allocation (predicated on risk tolerance, time horizon, and investment objectives) over time. As capital markets fluctuate, with various asset classes registering dissimilar returns, periodic yet consistent rebalances to target allocation is required. Strategic asset allocation most closely resembles a buy and hold strategy.
Security Selection – is the determination of which securities (i.e. stocks, bonds, etc.) will be chosen to implement the preferred management strategy, whether tactical or strategic. All potential securities are analyzed on the basis of relative value, growth and profitability, and if appropriate, are selected to construct the portfolio satisfying the intended objective.
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Diverse Portfolios Our four portfolio solutions all adhere to the foundational principles of Modern Portfolio Theory.
Open Architecture Allows for allocation construction based on return expectations, standard deviation and correlation considerations, not security type.
Risk Return Optimal Whatever the design, our portfolios seek to be frontier efficient.
Our Investment Management Philosophy We manage investments from a risk based perspective. Portfolio performance is measured only on a risk adjusted basis. Return objectives are defined by long term client intentions, not by current market conditions.
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Investment Advisory Services offered through BerganKDV Wealth Management LLC, an SEC Registered Investment Advisor.Â