1. Creating your client profile
In our first initial meeting, we learn about your financial objectives, risk tolerance, and tax profile. We also begin
to understand your total balance sheet, cash flow, estate plan, liability exposure, and current investment allocation.
We aggregate and analyze this information and build
a comprehensive Financial Report with our recommendations.
2. Creating your custom portfolio
If you choose to hire Portola Creek after we review your Financial Report, we will provide a written proposal summarizing portfolio changes to come in the next few months, and the tax ramifications of those changes.
Our investment approach starts with a macro view of the economy. We follow global financial markets and assess the geo-political environment. We also look at micro-factors such as inflation, interest rates, and GDP growth.
From here, we identify the most attractive countries and sectors to include in our portfolios, before selecting individual securities to own. Technology allows us to digest dozens of important statistics like earnings momentum, changes in analyst recommendations, return on investment, insider buying and selling, and volatility to name just a few. Most importantly, we know in real-time which statistics are most meaningful to the direction of the market, or a stock, at any given moment. This kind of analysis helps us identify the most attractive countries, sectors, and individual stocks eligible for inclusion in our portfolios.
Environmentally-friendly, Socially-Responsible, and Corporate Governance (ESG) data was previously only available to the largest institutions and family offices. Even then, the data was raw and fairly unusable to an investor without an engineering background.
What has come with the growing interest in sustainable and socially-responsible investing, is the birth of many single and/or aggregated sources of ESG data. The second filter in our selection process is whether or not the stock
(or country) has exemplary ESG ratings. In other words, we own stocks that are attractive from fundamental and technical perspectives AND also leaders in regard to ESG criteria. Having spent most of our careers working at banks, broker-dealers, and traditional RIA firms, we find it encouraging that investors focused on sustainable investing are collaborative and supportive of each other. In some ways, our investment committee is a virtual one. We have deep relationships with investment firms around the world that are passionate and experienced about this space.
We prefer to own individual stocks and bonds over funds. Our clients’ portfolios typically hold less than 100 positions, rather than trying to mirror an index. We do not allocate investments to the typical style-boxes that our industry likes to use. We prefer to invest for the duration of a market cycle, for growth at a reasonable price, earning long-term capital gains treatment. Our allocations are not static, but dynamic, adjusting to changes in market conditions or your unique financial objectives.
3. Performance Evaluation
Portola Creek generates a quarterly report which outlines your household balance, asset allocation, portfolio income, cost basis, and investment performance. This is generally a great time for us to meet face-to-face to review the report together, share our investment outlook, and determine if anything about your profile has changed since the prior quarter. With this said, we are always on call for client meetings and calls. The more communication we have with you, the better.
"The first step in a value manager’s process is to remove the most expensive stocks from consideration. We do almost the same thing, to avoid the worst performers on material ESG issues because they similarly represent less attractive long-term investment opportunities."
– Joshua Linder, formerly PM at Calvert