Investment Process

Our Investment Process combines Investment Selection, Global Diversification, Portfolio Construction and Portfolio Rebalancing tp achieve our Client objectives.  Island Light attempts to add investment value at every step in the investment process.

Investment Selection

For the Island Light Portfolios, we typically select passive index instruments, such as Exchange Traded Funds (ETFs) and index mutual funds, for implementing the investment mandate. The funds are chosen for low expense ratios, low tracking error, seasoning and liquidity. From time to time, when more active funds are selected, Island Light looks for relative performance, liquidity, investment consistency, and manager breadth. In every case, the mix of securities is designed to add value from risk diversification. We prefer to use only index ETFs in our model Island Light portfolios

Global Diversification

We diversify across investment asset classes that cover the major global sources of economic growth.  The portfolios have exposure to domestic, international and emerging market equities, bonds and real assets.  Diversification is achieved through the use of Exchange Traded Funds (“ETFs”) or mutual funds that track these markets.

Portfolio Construction

Research has shown that the asset allocation decision is the most important determinant of long term success in investment planning.  We strongly agree with this research.  We believe that markets are relatively macro-inefficient, so that value can be added at the asset class level using superior investment judgment and a disciplined investment process. Asset weightings in investment portfolios are globally diversified and developed to substantially conform to the investment policy objectives.

Portfolio Rebalancing

As markets change over time, so will the weightings in a portfolio. Changes in markets and securities will also provide opportunities to trade to a new portfolio, balancing the costs versus the benefits of trading.  When a rebalance is called for, we will implement the changes using best practices for trading securities.