Want A Customized Portfolio Proposal? It's Easy! Just Complete The Portfolio Design Form and then Contact Heritage or just give us a call at (303) 670-9761 and we will walk you through the process.

Times change. Markets change. Are your portfolios keeping up? If you are using traditional, old-school asset allocation techniques, the answer is probably, no. At HCR, we’ve broken free from the past and utilize what we call Modern Portfolio Diversification™ (MPD™) when designing client allocations.

Modern markets require modern thinking. MPD™ is just that – a modern approach to developing properly diversified portfolios for today’s markets.

Traditionally, a diversified portfolio has been split among U.S. stocks, foreign stocks, bonds, and cash. More recently, the concept has been expanded to include additional asset classes such as real estate, gold, commodities, emerging markets, and foreign bonds.

However, since the turn of the century, investors have learned that traditional diversification strategies focusing on asset classes did little to protect them from the two brutal bear markets that occurred within a nine-year span. As such, HCR believes that classic asset allocation alone has fallen well short of investors' needs.

If the brutal bear cycles of 2000-02 and 2008 taught investors anything, it is that traditional diversification is not enough in today’s fast-moving environment. HCR’s Modern Portfolio Diversification™ approach takes a different tact. Instead of diversifying solely by asset class, MPD™ spreads client portfolios across multiple strategies, managers, and investment methodologies in order to help hedge against whatever comes next.

What is MPD™?

A modern approach to portfolio diversification is created by moving beyond the traditional strategy of mixing of asset classes. At HCR, we believe that Modern Portfolio Diversification™ is achieved by also incorporating:

  • Multiple Strategies
  • Multiple Managers
  • Multiple Investment Methodologies
  • Multiple Time Frames 

… And then diversifying across all of the above in a customized fashion in order to meet the individual needs of each and every client.

Want A Customized MPD™ Portfolio Proposal? Complete The MPD Request Form and then Contact Heritage or give us a call at (303) 670-9761

The Goals of the MPD Approach

Simply put, the primary goal of the MPD™ approach is consistent, long-term investment performance.  There is obviously no such thing as “set it and forget it” in today’s investment markets. But employing the use of multiple strategies, managers, and investment methodologies may be the next best thing.

By utilizing a modern diversification approach, we believe investors are more likely to allow their strategies and managers the time needed to perform optimally. Remember, no strategy, manager, or investing style works well in all market environments. In reality strategies, managers, and styles/methodologies go in and out of favor in terms of performance – all the time.

Instead of investors fretting about their portfolio failing to keep up with a particular benchmark such as the S&P 500 due to a strategy experiencing a period of underperformance, those using an MPD™ approach can rest assured that employing multiple strategies and multiple methodologies can minimize this risk. In short, proper diversification affords investors the opportunity to “buy and hold” their portfolio allocation for long periods of time.

Another objective of MPD™ is to avoid what is referred to as a “singular failure” in a portfolio. All too often, investors wind up with portfolios that are heavily concentrated in a single strategy or with a single manager and/or a single investment methodology. Such an approach means that the entire portfolio is subject to underperformance (or worse) when the strategy, manager, or methodology underperforms. And if there is one thing that is certain in the investing business, it is that ALL investment strategies will experience periods of time when the approach utilized falls out of favor.

So, instead of a concentrated portfolio that is subject to the risk of a “singular failure,” doesn’t it make more sense to diversify that risk properly across multiple managers, strategies and methodologies?

Creating MPD Allocations

At HCR, we believe that building Modern Portfolio Diversification™ into client allocations involves a series of well-defined steps. To be sure, some of these steps are as old as the hills. Yet others involve a more modern approach to investing and portfolio design.

Step 1: Define investor goals

Step 2: Define investor risk parameters

Step 3: Develop a custom investor policy statement

Step 4: Develop a customized investor benchmark

Step 5: Identify the preferred investing Styles/Methodologies to be used

Step 6: Identify the preferred Strategy Types within each style/methodology

Step 7: Let the HCR create a multi-manager, multi-strategy, multi-methodology portfolio using the HCR Portfolio Solutions Platform

The result of this process is a well-intentioned, customized, “modern” portfolio of investment strategies designed to meet your specific goals, objectives, and risk tolerance.

For example, a typical MPD™ allocation may include a passive allocations strategy, strategic allocation strategies, tactical solutions, alternatives, individual equities, risk management techniques, and perhaps even an absolute return strategy if desired/warranted.

Want A Customized MPD™ Portfolio Proposal? Complete The MPD Request Form and then Contact Heritage or give us a call at (303) 670-9761

How to Develop an MPD Allocation

This is the easy part. Simply contact your HCR Representative.  From there, your portfolio needs and financial situation will be submitted to the HCR Portfolio Design Department – and we will take care of the rest.

Our team of investment professionals will then customize an MPD™ allocation designed to meet your needs, objectives and risk tolerance.

So, crack the code. Break free of the past. Stop trusting your portfolio to “theory” that was developed in the 1950’s. It is time to modernize your thinking, your strategies, and your approach to portfolio design. 

Have Questions?  Contact Heritage or give us a call at (303) 670-9761

Please see disclosures regarding the risks of investing as well as additional disclosure regarding the risks of using leveraged and inverse ETFs in our Disclosure page