Our investment philosophy
The McCarthy Wealth Group specializes in wealth management consulting by developing long-term investment strategies for affluent investors. Our approach is objective, well researched, and unbiased, tailoring each plan to enhance, protect and ultimately transfer family wealth. Our team primarily works with individuals and families holding in excess of $1,000,000 of investable assets.
Our investment philosophy has been cultivated through a combination of exhaustive research and our years of experience managing our client’s portfolios. The foundation of our philosophy is built upon the following beliefs:
- Market Timing Presents More Risks Than Opportunities
- Proper Diversification Can Maximize Return Relative to its Corresponding Measure of Risk
- Dollar Cost Averaging is A Powerful Way to Build Wealth Over the Long Term*
- A Core and Satellite Asset Allocation Can Add Performance Value.
- Dividends Play an Important Role in Long Term Performance
- Investment Fees are an Important Criteria in Portfolio Construction.
Development of an Investment Policy
A uniquely crafted investment policy statement (IPS) is the centerpiece of our approach. This policy is created after undergoing a thorough understanding of your current situation, your future goals, how you feel about risk, and your family dynamics to provide the best advice possible within the risk parameters we establish together. A completed IPS will address the following areas:
- Investment Objective & Risk Tolerance
- Duties and Responsibilities of Investment Advisor
- Strategic Allocation
- Rebalancing Guidelines
- Implementation and Monitoring Criteria
We employ a core + satellite investment philosophy using primarily passive investment management for fixed income and active investment management for equities. We believe this approach allows for appropriate diversification while taking advantage of contrarian and momentum investment principles using investments providing both value and growth opportunities. We believe stocks will outperform bonds over time (10 year or longer periods) and provide protection from inflation. During creation of the IPS, we establish maximum and minimum weightings for each of asset category and based on market expectations will overweight/underweight these asset classes in an effort to outperform our blended benchmarks. Realistic capital market assumptions are used, giving our clients additional confidence of a favorable outcome. It is important to note, these strategic decisions will not be allowed outside the minimum/maximum criteria of the IPS unless an amendment to the IPS is adopted by the client.
Our core portfolios are primarily buy and hold based on modern portfolio theory and provide absolute returns as well as interest and dividends to provide cash flow and are rebalanced over time. Our satellite portfolios are built using securities we believe have upside potential based on market opportunities identified using research based on technical and fundamental analysis provided by investment experts at RBC Wealth Management, our experience and independent third parties.
Our research has shown that attempting to consistently time when to invest in (and out) of the market actually presents more risk than allowing a well diversified portfolio to withstand the ups and downs of the market. When our team acquires new client assets, our implementation process is as follows:
- If investing new cash, our team follows a disciplined dollar cost averaging schedule:
- If the client’s assets are fully invested in the market, we will reallocate immediately as to not incorrectly time a market movement.
Advisory Fee -- Account Management
Implementation of our investment portfolios are accomplished using a fee-based advisory platform. This allows for us to provide the value and flexibility necessary for highly customized portfolios. Advisory means we help determine the investment strategy, monitor the portfolio within established guidelines and make changes based on client goals. Our team is compensated based on a percentage of the assets we manage.
Each client grants The McCarthy Wealth Group the discretionary authority to manage the portfolio according to the clients goals, risk tolerance, and their Investment Policy Statement. We have found this authority allows us to act nimbly and swiftly to any adjustments needed to be made within the allocation. In order to act as a discretionary portfolio manager, the principal partners of the The McCarthy Wealth Group group have been required to meet specific qualifications and undergo a thorough approval process by our firm. Our team takes this responsibility very seriously and feels this type of management ultimately enhances the value of our services.