Services > Investment Advisory
The investment management process includes the following steps:
- Analyze
Current Financial Position
CedarPoint conducts a thorough analysis of the client’s current investment portfolio, financial goals, time horizons and risk tolerance, as well as any other unique circumstances that would require further personalization of the client’s strategy. - Developing and Design of Optimal Portfolio
CedarPoint will recommend what it considers to be the optimal portfolio strategy based upon model portfolios. Each model is constructed using different weightings of equity, fixed income and alternative investments. - Formalize
Investment Policy Statement
When the appropriate model is agreed upon by the client and CedarPoint, a formal asset allocation summary will be provided. - Implement Policy and
Portfolio
CedarPoint will coordinate the brokerage and/or custodial relationship that are required to make this arrangement most effective for the client. CedarPoint will prepare and submit paperwork to open the account, and will initiate and monitor the transfer of all existing accounts that are to be brought under the management of CedarPoint. For custodial services, CedarPoint typically works with either TD AMERITRADE Institutional or Charles Schwab & Co., Inc. It is important to note that CedarPoint does not maintain custody of securities or funds with the exception of its ability to withdraw Advisory Fees from client's accounts. - Monitoring and Supervising Investments
CedarPoint will monitor and supervise the individual components of each portfolio of the client. CedarPoint will prepare quarterly performance reports that document the performance.
CedarPoint’s investment philosophy revolves around the concepts of, but not limited to, Modern Portfolio Theory. The basic concepts are as follows:
- Risk vs. Return
The model assumes that investors are risk averse, which plainly stated means that given two assets that offer the same expected return, investors will prefer the less volatile one. In short, a reasonable investor will take on increased risk only if the investor is likely to be compensated by higher expected returns. Conversely, an investor who wants higher returns must accept more risk. The exact trade-off will differ by investor based on individual risk aversion characteristics. The implication is that a rational investor will not invest in a portfolio if a second portfolio exists with a more favorable risk/return profile – i.e., if for that level of risk an alternative portfolio exists which has better expected returns. - Diversification
An investor can reduce portfolio risk simply by holding instruments which are not perfectly correlated. In other words, exposure to individual asset risk can be reduced by holding a diversified portfolio of assets. Proper diversification will systematically allow for the same portfolio return, but with reduced levels of risk. - Efficient Frontier
The efficient frontier is a concept that is based upon a now widely accepted investment philosophy that says that a linear relationship exists that illustrates the ultimate risk vs. reward scenario at every point upon that line. This line effectively represents a collection of portfolios, each one optimal for a given amount of risk. Every possible asset combination can be plotted in risk-return space, and the collection of all such possible portfolios defines a region in this space. Combinations along this line represent portfolios (explicitly excluding the risk-free alternative) for which there is lowest risk for a given level of return. Conversely, for a given amount of risk, the portfolio lying on the efficient frontier represents the combination offering the best possible return. This concept was first introduced in 1966 by Eugene Fama of the University of Chicago, and based in large part on the research of Nobel Prize winner Harry Markowitz.
Model portfolios are typically composed of but not limited to mutual funds, exchange traded funds, individual stocks, bonds, municipal securities, government bonds, annuities, certificates of deposit and cash and cash equivalents.
