Asset allocation is traditionally achieved in two ways: by owning a core portfolio that replicates the characteristics of the total equity market, or by building a portfolio from component asset classes. We utilize core equity strategies that adopt the total market approach by targeting return premiums across the multiple asset classes of the US, international and emerging equity markets.

 

Because the core equity architecture is seamlessly integrated across the full range of securities, the turnover and transaction costs normally associated with maintaining multiple components are strongly reduced.

 

 

The total market is weighted by market capitalization (price times shares outstanding), causing large cap growth companies to dominate. The applied core equity strategies alter the weighting of stocks by considering both a company's market cap and its book-to-market (BtM) ratio. As a result, exposure to the riskier small and value shares that research shows offer higher expected return is increased. To balance out the greater small and value exposure and still include every stock in the market, the weight of large cap and growth stocks is reduced.