Behind the Numbers

Below is a table which compares the investment performance of Shoreline Wealth & Investment Management (SWIM) using commingled accounts in our three tactical asset allocation models with that of the S&P 500 and NASDAQ Indexes since 1998. As you can tell, SWIM has performed well against both averages on an average per year rate of return. The S&P 500 is the index SWIM attempts to outperform. SWIM shows the returns of the NASDAQ Index for illustrative purposes but considers this index much too volatile (risky) and not one SWIM attempts to consistently beat.

Investment Performance Assumptions

The table below shows the per year rate of returns for the SWIM, S&P 500 and NASDAQ Indexes in the column under each year listed. The average annual return column is highlighted in yellow for comparison purposes. The average annual return column assumes all money was invested for the entire time period listed. The value column assumes the value of a $1,000,000 investment made on 31 December 1998 and that no withdrawals were taken during the entire time period listed.

Three Portfolio Choices

Select from our Conservative, Moderate and Aggressive strategic asset allocation portfolios. Our clients have different investment goals, experience, time horizons and risk tolerance levels. In fact, a single client may have different goals for different accounts including those for personal investments, retirement income, educational or philanthropic funding and so on. Our diversified investment advisors work with our clients to assist in selecting the appropriate portfolio(s) which offer flexibility, and also to select different portfolios as investor needs or goals change.

Time Frame & Tolerance for Risk Factors

We have different weightings in different markets and market sectors for each of our three portfolios which we offer and re-balance these portfolios regularly. It is interesting to note that we’re not alone in adopting this strategy although our specific mix in each of the portfolios is unique. A recent study by mutual fund manager T. Rowe Price showed that re-balancing portfolios annually provided 20% less risk (i.e. volatility) and almost identical returns to selecting an asset allocation and never re-balancing. Harvard, the richest school in the U.S. is among a very few academic institutions whose endowments have generated stunning returns. They have done so by selecting asset allocation models which they do not alter regardless of market direction. A recent New York Times article quoted the chief strategist of Harvard’s endowment fund stating that “We have no idea which way asset classes are going to move [and] I don’t think we are smart enough to be right. I am a terrible dinner party partner. Someone will say: So what do you think of the stock market, and I will say, ‘I don’t have a clue.’“ We couldn’t have said it better ourselves. And yet, our track record using strategic asset allocation and rebalancing the portfolio allocations regularly has produced very respectable results, presented farther down the page for your review.