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CLS believes risk budgeting is essential to the management of client
portfolios. Think of a risk budget as a thermostat. Everyone has a
comfort zone – some may like the thermostat set at 68°
while others may prefer 73°. No matter what the weather is
outside, the thermostat adjusts to keep the temperature inside at a
preset level. Risk budgeting is essentially a thermostat for a
client’s portfolio. Advisors work with each client to determine
his or her risk budget according to personal financial goals, capacity
for risk, and investment time horizon.
The CLS Investment Committee provides daily management of all CLS
portfolios. We will make adjustments to account holdings in response
to market conditions that cause the risk associated with the holdings
to change. If these adjustments cause an increase in the overall risk
of an individual client’s portfolio, CLS makes complementary
adjustments to other holdings in the account to bring the
client’s portfolio back into alignment with his or her risk
budget.
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