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Investment Management

Polaris manages client accounts using a process similar to that employed by pension consultants and the managers of endowment funds.  Pension consultants help their clients construct portfolios to fund the pension payments they make to their pensioners.  Endowment funds usually make similar distributions to fund charities.  Both avoid speculation and focus on controlling risk and providing cash flow.  Polaris has the same focus.

We begin by constructing model accounts, where different investment types are chosen to receive parts of our client’s accounts.  We hold stocks for growth, bonds for income and cash for safety.  Growth allows our clients to fund cost increases over time.  Income pays for expenses today, and cash is used to avoid selling our investments during times of trouble.  How much we hold of each determines how much risk a portfolio contains.  We call this “risk profile” our “Investment Policy.”

With this overall investment “Policy” in place, we staff our portfolios with top rated money managers; usually in the form of mutual funds.  Each is an expert in their investment type, such as Real Estate, Growth Stocks, or Bonds.  We carefully scrutinize our managers to see how they have done in past markets, both up and down, review their ethical policies, understand their corporate culture, employee tenure and experience and apply our judgment to determine the likelihood they will continue to succeed for us. 

A properly structured account should always have something that’s working and something that’s not.  This is what’s meant by “balance.”  It gives us someplace to look for our distributions no matter what cycle the investment markets are in.  We call this process; “Harvesting the Global Economy.”  It means we earn what the world economy has to offer, subject to the risk each individual client can bear. 

Once a client’s account is structured and funded, it’s compared routinely against its model and rebalanced periodically.  Models are changed slightly over time as market conditions warrant.  When a model is changed, all the accounts using that model are changed.  Large or small, all clients receive equal treatment.

Despite all this attention to minimizing risk, it cannot be completely eliminated.  As we saw in 2002 and again in 2008, there are times of extreme duress when selling is so intense that we cannot convert our investments to cash at reasonable values.  At such times, we must rely on our existing cash balances to fund our withdrawals.  Understanding the process helps clients become comfortable that our accounts are designed to bend without breaking.

We are happy to meet with you to discuss how investment markets behaved during these times, how we did, and what level of risk would be appropriate for you.

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