Our Strategic Advantage
The edge you will get with Paisley Financial lies within our strategic design to Capital Management. Our Trilateral Active Management approach is our optimal way to achieve maximum diversification & growth, as it encompasses all of our active management capabilities into a single, engine.
Active Strategic Management
- Growth Strategies
An aggressive portfolio strategy mostly comprised of our top growth stocks which aims to maximize capital growth. Risk is typically managed through the use of a well-diversified stock portfolio.Learn More
Strategies that attempt to achieve growth but is averse to taking on large amounts of risk by tilting towards stocks, up to 60%. Growth is placed as the primary emphasis and current income as their secondary emphasis though may change depending on prevailing market conditions.Learn More
An amalgam of fixed income & short term revenue generating instruments that are focused on low risk objectives. The investments sought are of a high yield with a steady dividend history. Option strategies may be use to grind out additional gains or to work as a volatility hedge.Learn More
Hedge Fund Style (Long/Short)
Our Trilateral Active Management approach is our optimal way to achieve maximum diversification & growth, as it encompasses all of our active management capabilities into a single, engine. The strategy incorporates all of our fixed income, currency, equity and commodity trading strategies we have developed into a model that will ebb and flow with volatility, growth, recessive interruptions or trends and all invested in a securities-only product.Learn More
Active Vs Passive Management
A lot of debate has gone on about Active
Management versus Passive Management and while Paisley
Financial believes in Active Management there are merits to
both sides if executed at the right time and place based on
the suitability of the client. Let's first talk a little about
Passive managers make no forecasts of the stock market or the economy, and no effort to distinguish "attractive" from "unattractive" securities.
A passive manager investing in large domestic stocks, for example, makes no determination if Ford is preferable to General Motors, Coca-Cola to Pepsi, or Campbell Soup to Kellogg. Instead they simply buy every large company from Abbott Labs to Zion’s Bank, resulting in a portfolio with hundreds of stocks. Once assembled, turnover is very low since every stock is intended to be held indefinitely. Portfolio adjustments are made only in response to fundamental changes in the underlying universe of stocks - when CBS disappears in a merger with Westinghouse, for example, or a new company such as Google joins the ranks of large company stocks.
Passive managers often construct their portfolios to closely approximate the performance of well-recognized market benchmarks such as the Standard & Poor’s 500 index (large U.S. companies), Russell 2000 index (small U.S. companies) or Morgan Stanley EAFE index (large international companies).
On the positive side brokerage costs are typically lower because transactions are fewer. Taxation tends to be lower because of the low turn over and there is also the advantage of Long Term Capital Gains Tax which may or may not be apportioned in an active program. Investment Manager fees may be lower do to less interaction. If used this strategy anytime in the 80's or 90's you probably had solid returns.
On the negative side, if you set up a program that mirrored the S&P 500 Index and started on January 1st of 2000, as of August 1st 2010 you basically had a zero return for your time. Also, if you purchased a basket of stocks that mirrored the NASDAQ in 2000 you are still down by 60% 12 years later with little hope to get back to zero for another decade.
There are virtues to passive management, but like with anything successful, timing is everything. There are times when buy and hold is a fine strategy and other times where it allows you no downside risk protection.
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.
While Paisley Financial primarily uses an Active Management style we do believe that there is a time and place for a modified Passive Management style. If you are in your 20's with a modicum of savings it is probably better to be in the market in some capacity then out of it because theoretically speaking you have a long time horizon and can afford to take on risk. Also, if you were to start your buy and hold strategy in 1974, 1987, 2003 or 2009 you would have done well holding as opposed to buying in 1976, 2000 or 2007. This is not to say that an Active style would not have done better or for that matter worse. This is just a making a case that we believe timing is a key factor when choosing a Passive Style or really any style for that matter though Passive is particularly susceptive to timing and time horizon as you can see.
Remember that 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.
Talk to a Paisley Advisor and they can help you determine that right strategy for you.