Strategic Portfolio Design

Strategic portfolio design is the cornerstone of Greycourt’s advice. It is the process that Greycourt uses to develop a client-specific, long-term mix of assets and strategies for each client that is a diversified blend of protective, liquid and illiquid investments. These portfolios are created to carefully satisfy spending and lifestyle needs, as well as to enhance real wealth and purchasing power. Throughout our process, we are focused on net-of-fees, after-tax (when applicable) and cash flow based performance.

Greycourt’s strategic portfolio design process utilizes a global investment palette to design client portfolios, which spans across all asset classes and investment strategies. Using Black-Litterman* methodology, we skillfully combine the market’s implied returns and Greycourt’s views to generate inputs to our proprietary model.

*The Black-Litterman model was originally developed in 1990 by Fischer Black and Robert Litterman. It is a mathematical model for asset allocation that begins with the assumption that the existing asset allocation of a specific asset category is proportional to its market value, and then makes modifications according to the views of a specific investor to arrive at a customized asset allocation.

Manager Research

Our dedicated manager research team researches long-only equity, fixed income and alternative investment managers. The goal of our research efforts are to find managers that will outperform in the future, not simply those that have outperformed in the past.

Our research team has a “first day” mindset and discipline that dictates how and what we research. We identify managers possessing sustainable differential advantages, and we use a three part litmus test for Greycourt recommended managers:

  1. Does the manager pursue a strategy that Greycourt has identified as an important opportunity and that corresponds to our firm’s investment views?
  2. Does the manager and fund operate in a way that will create the most positive leverage for our clients?
  3. Is the manager truly among best in class for the strategy at hand?

Greycourt’s research process has four primary spokes:


Investment Due Diligence

Stage 1: Identify managers (pipeline management, lead generation, inside and outside referrals, advisors and colleagues)

Stage 2: New Manager investment due diligence (what does the manager do and how, understand prior positions and returns and current portfolio, use a variety of quantitative and qualitative tools)


Operating Due Diligence

Stage 3: New Manager operating due diligence (assessing fraud risk and benchmarking, using tools such as document review, background checks, vendor references, audit analysis and review of systems and infrastructure)


Ongoing Due Diligence and Reporting

Stage 4: Ongoing research that maintains our “every day is the first day” mentality. Analysts read, interpret and analyze manager reporting, document the work and communicate internally and externally.


Client Communication

Investment managers are discussed every week at Greycourt Investment Committee meetings. Any significant developments that occur intra-quarter with a manager are sent immediately to clients.

Investment manager communications include:

  • Quarterly product updates for all traditional and hedge fund managers
  • Semi-annual product updates for all private markets managers
  • Emails and flash memorandum communications
  • Due diligence binder information available upon request
  • Performance included in client monthly flash and quarterly performance reports

Reporting and Rebalancing

Greycourt closely monitors client portfolios and sends regular consolidated performance reports. Specifically, these reports consist of the following:

  • Quarterly performance reports use our independent performance calculations reconciled to manager-reported results. Attribution reporting and additional analysis can also be included as part of the quarterly report. Included within each client’s quarterly report is a detailed illustration of current holdings vs. the target allocation for each asset class. In addition, Greycourt will supply a written description of overall market activity for the quarter, a specific description of each portfolio’s performance, and any specific recommendations. For clients who do not want the comprehensive version of our quarterly performance reports, we can provide a more concise version in our Executive Summary report.
  • Monthly manager “flash” reports compare the manager reported performance against appropriate benchmarks. We investigate any significant over- or under-performance and will contact mangers for additional information and explanation of their performance as needed.

Our strategic portfolio designs that are customized for each client include a target exposure for each asset class and a range around that target. Greycourt opportunistically rebalances above or below the targets, depending on Greycourt’s tactical outlook. Out-of-balance portfolios may be rebalanced back to the minimum or maximum ranges or back to the target exposure, depending on valuations and dislocations in that sector of the market. Greycourt believes in a disciplined variance (within established ranges) from strategic targets based on three key investing principles:

  • Extraordinarily high returns in an asset class do not continue indefinitely and tend to be followed by below-average returns and vice versa
  • Active outperformance requires contrarian and counter-emotional investing (buy what you hate and sell what you love)
  • Price counts and relative valuations drive our assessment of asset class and manager attractiveness
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