Active Strategic Management
Management / Financial Planning
Wealth management is an investment advisory discipline that incorporates financial planning, investment portfolio management and a number of aggregated financial services. Contact a Paisley Financial Associate to learn more about how we can provide for you.Learn more
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Active management refers to a portfolio
management strategy where the manager makes specific
investments with the goal of outperforming an investment
benchmark index. Investors or mutual funds that do not aspire
to create a return in excess of a benchmark index will often
invest in an index fund that replicates as closely as possible
the investment weighting and returns of that index; this is
called passive management. Active management is the opposite
of passive management, because in passive management the
manager does not seek to outperform the benchmark index.
At Paisley Financial, we strategically attempt to exploit market inefficiencies by purchasing securities that our research suggests are undervalued or by constructing counter positions on securities that are overvalue. These types of strategies are always dependant on the customers risk parameters or needs that they request be met. Another goal of an active approach is to create less volatility (or risk) than the benchmark index and that reduction of risk will attempt to create an investment return greater than the benchmark.
We believe in the effectiveness of an actively-managed investment portfolio Many mutual funds purported to be actively managed stay fully invested regardless of market conditions, with only minor allocation adjustments over time. Other managers will retreat fully to cash, or use hedging strategies during prolonged market declines. These two groups of active managers will often have very different performance characteristics.
We use a variety of factors and strategies to construct our portfolios. These include quantitative measures such as Top / Down analysis along with sector investments that attempt to anticipate long-term macroeconomic trends such as a focus on energy or financial stocks or at times a defensive retreat to high dividend yielding stocks with option hedges to protect against downside risk. For these reasons, many clients find active management an attractive investment strategy in volatile or declining markets or when investing in market segments that are less likely to be profitable when considered as whole.
There is a time and place for each investment style. Passive Management tends to work well in times of lesser volatility or market certainty and Active Management, if properly executed tends to do well in deflecting risk in times of higher volatility and more market uncertainty. The key is to have a manager that can navigate you through the certain and uncertain times.