All Weather Model Portfolios Australia | Gilshenan Capital

MODEL PORTFOLIOS

MODEL PORTFOLIOS

Stock Market Like Returns; with up to 75% LESS VOLATILITY?

What if you could create a "Model Portfolio" -

creating “All-Weather” or "Balanced" type diversification,

while still gaining exposure to Asymmetric returns?


“MY ADVICE TO THE TRUSTEE COULD NOT BE MORE SIMPLE: PUT 10% OF THE CASH IN SHORT- TERM GOVERNMENT BONDS AND 90% IN A VERY LOW-COST S&P 500 INDEX FUND.”
- Warren Buffett

To us, this is just another way of saying, “JUST OWN THE STOCK MARKET”.

While history tells us this might be a good thing to do in the long-term, sitting through 50%+ losses along the way can be a challenge even for the most seasoned investor.

THE SOLUTION…? MODEL PORTFOLIO

We want long term Stock Market returns; but with reduced volatility.

The Core Component of “Model Portfolio” is a GLOBALLY DIVERSIFIED PORTFOLIO.

Why do we diversify?

“FOR ANY LEVEL OF RETURN, IF YOU DIVERSIFY, YOU CAN GENERATE THAT RETURN WITH LOWER RISK... SO IT’S A FREE LUNCH”

David Swenson – Former Yale Chief Investment Officer, turning $1billion into $23.9billion

How is diversification created?

WE INVEST IN BONDS, STOCKS, PRECIOUS METALS AND CASH, ALLOCATING THEM IN AN EFFORT TO REDUCE THE SHORT TERM VOLATILITY,

WHILE STILL PARTICIPATING IN THE UPSIDE OVER TIME.

STRATEGY OBJECTIVE


  • ​Create long-term stock market like returns, with reduced volatility.
  • Take an Australian view of the global markets, and diversify across asset classes and geography, while reducing/removing currency risks.

INVESTMENT FOCUS


  • CORE ALLOCATION: Typically 75%-85%+ exposure to Stocks, Bonds, Gold, Cash and Commodities. These assets are invested in Australian & globally, while hedging out currency risk, where possible.

  • TAIL ALLOCATION: Typically up 15%-25% of the portfolio exposed to asymmetric risk/reward, global macro, hedging, activist or merger opportunities

  • CREATE A MIX OF THE 3 TOOLS AVAILABLE FOR REDUCING RISK AND INCREASING POTENTIAL RETURN:

    1. Asset Allocation – long-term strategy to diversify the Core of the portfolio.

    
2. Market Timing – shorter-term positions to help hedge the Core of the portfolio,where appropriate.

    3. Security Selection – implementation of asymmetric, global macro, hedging, activist or merger opportunities.

THE “TAIL” ALLOCATION:
The Tail is designed to positively augment the return of the diversified Core of the portfolio, by seeking to take advantage of the following opportunity sets as they present themselves in real time:

ASYMMETRIC RISK/REWARD
Invest in opportunities where we can reduce the downside (risk), relative to where our research/disciplines tell us there is disproportionate upside.

GLOBAL MACRO
Increasingly opportunities are created globally through market dislocations, political and regulatory upheavals.

HEDGING
Designed to protect the Core of the portfolio, in an effort to reduce volatility (to the down-side) of the entire portfolio.

MERGER / ACTIVIST TARGETS
We actively place ourselves, and our research, as close to merger and activist activities as possible, and seek to allocate and participate where possible. Much of the idea creation in the Tail allocation is produced through our industry relationships, partnerships and global investment interests.

​​​To review further documentation, email us at support@gilshenancapital.com, and we will be in touch.