Efficient Portfolio Structure
Once we have a detailed understanding of the objectives and constraints affecting the investment portfolio, we begin the process of identifying the optimal asset allocation for the investor. Our asset allocation research includes all traditional asset classes as well as alternative asset classes including private equity, hedge funds and real estate. Our asset allocation review includes a detailed analysis of the pros and cons of the various asset classes available for investment and the impacts different sized allocations have on expected results. When alternative asset classes are being considered, education is often the first step, ensuring the family members understand the complexities of the various strategies within these more complicated asset classes. We have substantial client capital in alternatives and bring that experience to the table when evaluating these investments with our family clients.
For our family clients that require different asset allocations for family members with different objectives and constraints, we have created investment pools that offer this flexibility. This structure creates "economies of scale" for smaller trusts and offers access to best in class investment managers at institutional fee levels to all family member portfolios.
Investment Manager Research
Our investment manager research is a key area of value added for our investors. We focus on identifying best-in-class managers in both traditional and alternative asset classes that meet our strict manager research criteria and that have outperformed the appropriate index and universe benchmarks after the deduction of investment management fees. Our traditional manager research area focuses on U.S. and non-U.S. equities as well as fixed income and covers all major investment styles within these asset classes. Our alternatives asset class research team has developed extensive topical research that supports the use of private equity, real estate and hedge funds in a total portfolio asset allocation. Additionally, this team has identified the market leaders in both direct and fund-of-funds investment managers in these areas. We conduct our own manager research in these areas.
Tax Efficiency
Ellwood Associates identifies tax-efficient investment strategies for our investors. Our investment manager research has identified best in class active investment managers that offer low turnover, tax efficient investment processes. We have also identified other strategies that improve the tax efficiency of the total portfolio including loss harvesting strategies. While we do not let the "tax tail wag the dog", we view taxes as a cost of doing business and like any cost, steps can be taken to control it.
Family Office Structure
Ellwood Associates acts as an "extension of staff" for all investment related issues. While we do not offer a complete suite of family office services, we join forces with the investor's accountant and legal counsel to create a family office of experts that meets with the client on an as needed basis (typically at least quarterly). We have found that this structure works well when making investment decisions as each discipline evaluates the investment strategies from their perspective. The result is a well-balanced analysis and decision-making process that guides the client to the best decision for their circumstances without the dedicated overhead associated with a full family office structure.
Education
Ellwood Associates is committed to providing education-oriented consulting to our investors. With high net worth investors, multiple generations are typically either currently involved with the oversight of the investment portfolio or will be in the not too distant future. Our high net worth family clients rely on Ellwood Associates to conduct educational sessions on a variety of investment topics that range from basic investment concepts to the more complex, depending on the situation. Families that proactively educate the next generations help prepare these family members to make a contribution to the oversight of the investment portfolio, building consensus on portfolio objectives.
No Conflicts of Interest
Ellwood Associates has no conflicts of interest. As a result, all investment-related recommendations are made in our clients' best interests. We have seen investment portfolios where the investment consultant is a division of a larger entity that offers other financial services/products. This conflict of interest often leads the consultant to make recommendations that provide some benefit to the parent entity. While it is difficult to determine whether this conflict of interest negatively impacts investment performance for the client, our approach considers all investment products and structures for the investor, without conflicts.
Performance Reporting
We produce comprehensive quarterly performance reports as well as summary monthly updates to assist our investors in the monitoring of the total portfolio as well as the individual manager allocations. Our reports are fully customized to meet the individual needs of each investor and include background information on the capital markets, specific details about the portfolio's total value and asset allocation versus targets, and detailed analysis of each investment manager versus appropriate index and style universe benchmarks. As part of our performance reporting, we monitor the investment managers for changes in people, organizational structure and investment process. Communications with the investor's managers occur regularly and we are proactive in communicating any developments at a client's investment managers.