Portfolio Construction
The ideal portfolio strikes a balance of safety and certainty on the one hand and aggressiveness and gains seeking on the other.
A Well-Constructed Portfolio Should
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BE A PORTFOLIO THAT CAN BE UNDERSTOOD
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HAVE THE ABILITY TO COMBINE MULTIPLE STRATEGIES
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BLEND PASSIVE AND ACTIVE MANAGEMENT IN AN INTELLIGENT WAY
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CORRELATE FEES TO VALUE
Investing for Safety and Certainty
Interest rates have been at historical lows with limited prospects for significant increases going forward. Investments that promise high income have embedded risks that we do not feel are worth the reward. Traditional bonds do not offer the combination of income and stability that they have in the past. That is why NS Capital, for this point in time, offers a choice of conservative investment options with low levels of risk and incremental reward. Investments that can be used either as a standalone or in some combination to achieve our goal of Safety and Certainty.
NS Capital’s primary job is to manage our client’s relationship to the capital markets and to protect against the risk of emotional decisions during times of turmoil. When NS Capital is hired it is not just to construct the portfolio based on the needs, wants and goals of a client at a specific point in time; it is also to change the portfolio when warranted–that can be from an investment standpoint or from the standpoint that a client’s circumstances change.
Investing for Gains Seeking
Timeframe
No one should invest in equities without a longer term time horizon, PERIOD! The safety and certainty portion of the portfolio should serve as a volatility mitigator because the pathway to superior long-term returns demands that the investor be able to stay emotionally detached from the “ups and downs” that will occur in the stock market. You can’t expect consistent results if you are seeking higher returns because only with full market volatility will you get full market returns.
NS Capital Equity Investing
NS Capital employs two approaches to equity investing:
“The stock market is a device to transfer money from the impatient to the patient.”
—Warren Buffett
NS Capital Portfolio Methodology
AN INTELLIGENT BLEND OF PASSIVE AND ACTIVE MANAGEMENT WITH CORRELATED FEES CREATES A WEALTH BUILDING ADVANTAGE
Within each portfolio tier, the efficiency of the market is matched with the most appropriate type of management.
Asset management and advisory fees within each tier are correlated to the ability to add value.
Beta Core
THE BETA CORE IS A PASSIVELY MANAGED EQUITY PORTFOLIO
WHICH TAKES WHAT THE MARKETS GIVE US
Characteristics
Strategically allocated based on the following:
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Analysis from the research departments of the largest exchange traded providers*
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Independent research from our network of respected industry resources
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Insights from our Alpha Ring active money managers
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Reviews of asset groups with the lowest three-year and five-year performance as a possible enhancement to our core ETF holdings
Composition
Broadly diversified – 13,000 securities, low cost and tax efficient
Investment Style
Momentum/Growth
Expectations
A long-term indexed portfolio that will participate fully and benefit from the historical upward bias of global markets
Preferred Holding Period
Five years
Current Holdings*
90% Large Global Markets
ETFs
10% Smaller Focused Markets
Total Stock Market
60%
International
Developed Markets
20%
Emerging Markets
10%
Emerging Markets
Infrastructure
2.5%
Oil & Gas Equipment
2.5%
Junior
Gold Miners
2.5%
Gaming
2.5%
* Current Holdings. The securities identified and described do not represent all of the securities purchased, sold or recommended for client accounts. The reader should not assume that an investment in the securities identified was or will be profitable.
Alpha Ring
THE ALPHA RING IS AN ACTIVELY MANAGED GLOBAL EQUITY PORTFOLIO
WHICH SEEKS LONG TERM OUT PERFORMANCE
Money Manager Characteristics
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Boutique: Independent, employee-owned firms
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Concentrated: Build tightly constructed portfolios comprised of sound, well-managed companies
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Capacity: Limit assets under management when their style/strategy reaches capacity and is no longer replicable
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Negotiated: Fees set at institutional levels
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Alignment: Commit funds side by side with their investors
Composition
Currently seven money managers, each with a different strategy, offer their best ideas for five to ten holdings in order to create a total portfolio of 45-55 total securities. The result is a fully diversified portfolio that is dramatically different than the passive Beta Core.
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50% Market Leaders – Large, well-known companies, both domestic and international, whose weighting in the portfolio is at least 2X its weighting in its respective benchmark.
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50% Undiscovered – smaller companies both domestic and international that are generally not part of a broad benchmark and are not widely followed by Wall Street analysts
Investment Style
Value/Price Conscious
Expectations
A unique portfolio that has the potential for a high level of upside and a degree of downside protection based on the fundamental security selection skill of the money managers
Preferred Holding Period
Five years
Current Managers*
Global Leaders
Money Managers
Global Undiscovered
Opportunities
Multinationals
Global Tech
International Small-Cap
Emerging Markets
Global All-Cap
Domestic Small-Cap
Global Catalyst Small Cap
* Current Managers. The identified managers are subject to change. The reader should not assume that an investment made by these managers was or will be profitable.
NS Capital –
A Boutique Firm with Deep Resources
Successful investing is in large part dependent on access to quality information, particularly when you most need it. Today, high-quality research is no longer just the domain of large organizations; with the advent of the internet and other tech applications research has been democratized. The challenge is accessing this high-quality research. NS Capital has created a research network that we believe stands apart in the investment advisory business. The investment committee has access to our advisors and their multiple research departments on an ongoing basis. The depth of these resources along with the investment committee enables us to access subject matter specialists around the globe.
NS Capital Investment Committee
Louis Cameron Day – Managing Director, Investment Committee Chairman
Mr. Day brings over three decades of experience in financial services to NS Capital Investment Committee. His experience includes being President and CEO of Capital Vectors International, a premier strategic consulting company in the financial services industry, consulting on product development, marketing and distribution with many of the nation’s top financial firms. Over a 20-year time frame Capital Vectors developed products and campaigns that raised over $200 billion in assets. Mr. Day later served as President and CEO of Engagement Systems, LLC, which created a turnkey asset management platform designed to help advisors better meet their need for independence, objectivity and differentiation in the wealth management marketplace. Mr. Day in partnership with one of the nation’s leading Investment consultants created NS Capital’s proprietary investment methodology and officially launched NS Capital LLC in 2010. Mr. Day began his career at Connecticut General, a leading financial and estate planning firm. After serving as Manager of their Manhattan Branch Office, he left to join Kidder, Peabody & Company as Vice President in charge of new product development and distribution.
Eric P. Hahn – Managing Director, Trading Analytics
Eric has been a Registered Investment Advisor Representative for NS Capital since its inception and became a Director in 2013. Eric is responsible for the trading and analytical functions within NS Capital. In addition, Eric provides investment advisory and portfolio management services for clients. Eric's prior experience in financial services includes his employment with Wedbush Morgan Securities as a trade associate. Eric holds a series 65 license and is continuing his pursuit of extended industry excellence. Eric is a graduate of Bucknell University where he earned a BA in Legal Studies.
bfinance is an institutional investment consultant headquartered in London with 10 offices globally. bfinance will be represented by 5 members:
Duncan Higgs – Managing Director, Head of Portfolio Solutions
Duncan Higgs is a Managing Director overseeing bfinance’s Portfolio Solutions division including portfolio strategy, risk analytics, fee reviews, portfolio monitoring and other services. He has 15 years of experience in investment consulting, including advisory and fiduciary services. Before joining bfinance he was a Director at Willis Towers Watson, where alongside his main responsibilities he was also part of the core team driving technology change in the investment business. Duncan also spent five years as a client manager at Cardano delivering tailored investment solutions to institutional clients. He graduated with a first class Master’s degree (with honours) in Physics from the University of Durham, is a CFA (Chartered Financial Analyst) charter holder and holds the IMC.
Mal Hunt – Managing Director, Head of Client Consulting
Mal has over 15 years of portfolio investment research, measurement, analysis, benchmarking and risk management experience. Mal joined bfinance from MSCI where he was Executive Director, EMEA Client Coverage, overseeing client support for 600+ investment portfolios (AUM approximately 1 trillion USD); helping their teams get the most from analysis and make informed investment decisions. Mal has extensive experience of portfolio investment measurement, analysis, and risk management; client service management including organizational design; and product research & design. Prior to MSCI, Mal was a Director of UK & Ireland at IPD, a Research & Strategy Analyst at M&G and a Risk Analyst at Bristol & West. Mal was also an Associate Tutor of Portfolio Performance Measurement at the College of Estate Management, Reading University.
Guy Hopgood – Director, US Client Consulting
Guy is a Director of both the US Consulting Division and the client consulting team. He was previously in the Private Markets research team based in London where he focused on infrastructure, real estate and other real asset strategies such as agriculture and timber. He joined from JLT Investment Consulting, where he was an Investment Consultant and Head of Alternatives Manager Research, advising clients on portfolio construction and manager selection across alternative asset classes. Guy graduated with an Economics degree from Rollins College having also spent part of his course studying in Shanghai, China.
Toby Goodworth, Managing Director, Head of Liquid Markets
Toby Goodworth is Head of Liquid Markets at bfinance, and a member of the firm's Senior Management Team. Previously Toby was Head of Risk Management at Key Asset Management, one of Europe's oldest fund of hedge funds, where he designed and ran the firm's bespoke risk models. Prior to that he was a risk analyst focusing on quantitative global equity strategies. Toby holds a Ph.D. in Physics from University College London and a First-Class honors degree in Physics, also from UCL.
Mathias Neidert, Managing Director, Head of Public Markets
Mathias is Head of Public Markets and a member of the firm's Senior Management Team. He joined bfinance as a Senior Associate in March 2008 focusing on manager research and selection in fixed income. He was named Head of Public Markets in 2014, managing a team of asset class specialists in charge of investment advisory within listed equity and fixed income. Before joining bfinance he worked for RBC Dexia in Luxembourg, most recently as Product Manager for Investment Analytics services. Mathias started his career in the investment fund industry in 2003. He is a CFA Charter holder and holds a master’s degree in business administration from the University of St. Gallen (Lic. Oec. HSG) in Switzerland.
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