Process

EmeraldSpark’s investment process blends the foundations of Modern Portfolio Theory with the latest research in the field of behavioral finance. We understand that human behavior can have significant impacts on the market in the short and intermediate term, and even the most efficiently constructed portfolios are of little use if the anxiety created by market swings compels an investor to abandon their long-term plan.

EmeraldSpark specializes in asset allocation and manager due diligence to help provide our clients with investment strategies personalized to match their specific goals and risk comfort zone. Our asset allocation process begins with developing long-term strategic portfolios across the risk/return spectrum based on our expected returns and volatility of each asset class as well as how those asset classes tend to move in relation to each other. The goal is to create the most efficient set of portfolios; that is to say the highest expected return for a given level of expected volatility. We regularly monitor economic data and analyze relative valuations of asset classes to identify shorter-term mispricings that are driven by human emotions. If the resulting transaction costs and potential tax implications are reasonable we will make tactical over-weights and under-weights to our long-term strategic targets to take advantage of these opportunities.

The due diligence process for evaluating mutual fund managers as well as exchange-traded funds (ETFs) is both quantitative and qualitative. We subscribe to Morningstar to get access to their research and data on the fund manager universe, and use that data to screen for potential funds for our approved list. Once we have narrowed the field down to a handful of finalists, we then conduct a qualitative review of their investment team and strategy. EmeraldSpark only selects funds with processes and management teams we have high conviction in. Individual equity analysis is also provided by Morningstar, which covers over 900 individual stocks.