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 come with embedded risks that we do not feel are worth the reward. Bonds do not offer the combination of income and stability that they have in the past. This is why NS Capital, for this point in time, created the Shorter-Term Fixed Income Portfolio to be more focused on safety and certainty than anything else. It is designed to provide investors with a liquid, conservative portfolio that offers the potential for better total return than Money Markets and CDs, but without taking significant risk.
Hypothetical Stress Test
A back-test of historical performance to help illustrate how the Shorter-Term Fixed Income portfolio can provide returns that are non-correlated to equity markets
RETURN
For illustrative purposes only. See disclosures for an explanation of each “stress event” referenced above.
* 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.
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.
Current Holdings*
88% Safety & Certainty
ETFs
12% Total Return Enhancement
Short-Term Treasury
50%
Short-Term Corp Bond
38%
Short tips
3%
S
Fallen Angels
3%
High-Yield Muni
3%
Emerging Markets Bond
3%
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 Buffet
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
Four to six 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
Six to eight years
* 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.
Current Managers*
50% Global Leaders
Money Managers
50% Global Undiscovered Opportunities
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 various research departments on an ongoing basis. In addition, our investment committee is able to reach out to over 20 subject matter specialists on an as-needed basis.
Better Information
Better Decisions
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