Fuller Asset Management, LLC (FAM) is a fee-based investment advisory firm offering portfolio management services for individual investors. After a review of current investment holdings and a discussion of investment objectives, an Investment Policy Statement is completed for a new client that outlines the terms of engagement. This includes recommended portfolio structure, position limits, securities approved for investment and rate-of-return goals. This document is reviewed and updated, if necessary, on an annual basis.
Clients receive quarterly performance reports from FAM in addition to the statements provided by the account custodian. FAM currently uses TD Ameritrade Institutional and Interactive Brokers as custodians for client assets. The firm has no access to client assets and does not use discretion in managing portfolios, but it does have limited authorization to place trades on behalf of clients and deduct advisory fees from client accounts.
I believe success requires adhering to a disciplined investment approach, shrewd risk management, and a tactical portfolio structure that can shift between offense and defense.
Portfolios are constructed by initially determining the minimum percentages to allocate as core exposure to each asset class necessary to meet the client’s investment objectives. A tactical range for each asset class is then agreed upon, taking into consideration both objectives and risk tolerance. Position size limits are established and adhered to for each type of security held within each asset class to minimize risk and maximize the benefits of diversification.
Individual stocks are selected with an emphasis on high quality, value, and dividend income. Individual bonds are selected to build ladders, with a focus on minimizing interest-rate and credit risk. Exchange-traded funds (ETFs) are used to gain exposure to commodities, with an emphasis on precious metals. ETFs are also used in certain circumstances to invest in segments of the stock and bond markets where buying individual companies is not prudent. Depending on the portfolio objectives and experience of the investor, options may be used to increase income and hedge exposure to risk.
After a decade-long bull market that was fueled by unprecedented monetary stimulus and years of near-zero interest rate policy, storm clouds are gathering on the horizon. History suggests that the next decade will be far more challenging for investors than the one that just ended. Long periods of outperformance have been followed by periods of underperformance, and vice versa, as there is a constant reversion to the mean. Therefore, I believe market returns will be below the historical average over the coming decade, and active management that is tactical in its approach will be critical to success.
My all-weather strategy for portfolio management involves maintaining a core exposure to each asset class. This includes stocks, bonds, commodities, and cash. The objective is always to have exposure to the best-performing asset class every year, regardless of the environment. This is the foundation of the portfolio, which is indifferent to shifts in market conditions. I then overweight the asset class or classes that I expect to outperform, depending on what stage of the economic and market cycle I believe to be upon us. This approach forces me always to be invested in the market while allowing me to shift tactically between wealth accumulation and wealth preservation modes.
This strategy is an adaptation of Ray Dalio's All Weather portfolio. Mr. Dalio is the billionaire founder of the world's largest hedge fund, Bridgewater Associates.
7135 E Camelback Rd, Suite 230, Scottsdale, AZ 85251