The PFM Global Investment Platform is comprised of our four key investment strategies:
Relative Equity Strategy (RES)
OBJECTIVE: Provide broadly diversified, global equity exposure. Outperform the benchmark index net of fees and expenses. Capital appreciation is targeted as the primary source of investment returns.
Our Relative Equity Strategy utilizes a “core/satellite” portfolio management style, whereby 75% of the portfolio (the core) is managed from a mid-to-long term perspective and provides cost effective, broad exposure to the global equity markets. Indexed mutual funds are the primary vehicle for core positions for two reasons: 1) The vast majority of mutual funds are not subject to transaction fees, allowing for accounts, particularly those with cash flows, to accumulate (or liquidate) shares in a very cost efficient manner. 2) Mutual funds tend to be the most cost effective in terms of internal operating expense ratios (OERs). Allocation changes within the core are generally reviewed or updated on a quarterly basis. The remaining 25% (the satellite) of this strategy is managed from a mid-short term perspective, and is intended to be more focused and concentrated in nature (i.e. specific economic sectors or subsectors, specific country exposures, specific market cap / style exposures, specific currency exposures, etc.). Given the potential for more frequent trading, indexed ETFs or ETNs tend to be the most cost effective vehicle for satellite positions. Some of these vehicles can be fairly concentrated; however, PFM will not buy or sell individual company stocks/bonds in this strategy. The positions within this portion of the portfolio are monitored on a daily and weekly basis. This strategy is benchmarked to the S&P Global Broad Market Index.
Dividend Income Growth Strategy (DIGS)
OBJECTIVE: Provide broadly diversified, U.S. equity exposure. Outperform the benchmark index net of fees and expenses over market cycles. Capital appreciation and dividend income are targeted as the primary source of investment returns.
Our Dividend Income Growth Strategy is a portfolio comprised mainly of individual U.S. common stocks that generally exhibit a strong history of dividend payment and growth through time. Companies of this nature tend to be large in size (typically greater than $10 billion), produce stable and growing cash flows, and have a tendency to be less exposed to cyclical variations in the overall economy. Owning individual securities can be more cost effective than a mutual fund or ETF, when the trading commissions generated are lower than the OER of the alternatives. This strategy is benchmarked to the S&P 500 Index.
Public Hedged Equity Strategy (PHES)
OBJECTIVE: Provide long term, equity-like returns while exhibiting dampened volatility and correlations to traditional equity markets.. Outperform the benchmark index net of fees and expenses over complete market cycles.
Our Public Hedged Equity Strategy is intended to act mainly as a core diversifier for client portfolios, and is to be used in conjunction with our other strategies. Mutual funds, ETFs, and/or ETNs within this strategy will tend to be hedged in some way, provide exposure to real assets (commodities, real estate, etc.), and/or generally exhibit different characteristics than traditional, long-only, equity and fixed income markets. This strategy is managed from a long-term prospective, the underlying funds are equally weighted, and are intended to be traded relatively infrequently. This strategy is loosely benchmarked to the S&P Global Broad Market Index over complete cycles, however no true benchmark exists.
Fixed Income Strategy (FIS)
OBJECTIVE: Provide broadly diversified bond market exposure, preserving capital and producing current income while exhibiting low volatility and correlations to equity markets. Outperform the benchmark index net of fees and expenses.
Our Fixed Income Strategy is comprised mostly of a combination of select managed mutual funds. Given the nature of how fixed income securities are traded, PFM believes there are considerable economies of scale, as well as preferential bid/offer spreads for fund managers that deal in large volumes. This benefit is passed directly to fund shareholders. PFM also believes that proprietary credit analysis (as performed by the funds’ management team) can identify changes in credit conditions or the creditworthiness of borrowers on a more real-time basis, as opposed to waiting for announced changes to credit ratings by the predominant ratings agencies (i.e. S&P or Moody’s). The mutual fund format allows for daily liquidity at the stated end-of-day NAV, regardless of the dollar size of the transaction. This strategy is benchmarked to the Barclay's Aggregate Bond Index.
*NOTE: There can be no assurance that the various strategies will be able to achieve their stated objectives. Past performance is not indicative of future results.