Oak Grove’s Process

Manager-Investor Relationship

We see your investment and financial management needs as a personal enterprise, not a routine, cookie-cutter exercise. In that vein, we perceive our role to be the CFO of that enterprise. Competent professional financial management requires that we understand your concerns, objectives, and the significant events in your financial life. Thus, we place high value in regular communication–with information flowing in both directions. We will invest the time to cultivate such a healthy level of communication and then will be empowered to use a superior understanding of investor objectives and needs to manage investor portfolios for more successful outcomes.

Strategic and Tactical Asset Allocation

Discussing individual stock selection is tantamount to “cocktail party” conversation. However, institutional and other professional managers–the so-called “smart money”–manage by various forms of asset allocation in combination with tactical strategies to manage risk and optimize performance. Executed properly, asset allocation can be an effective risk management device and a significantly higher determinant of portfolio return.1

Oak Grove manages a variety of portfolios by asset allocation according to investor risk tolerance and time horizon. By combining different classes of assets in each portfolio, we strive for effective diversification, designed to lower portfolio risk and raise expected returns. Then we actively manage the portfolios to readjust on systematic and tactical levels or in certain instances, tailor portfolios to specific investor needs.

A significant responsibility is selecting from among the best products and third-party managers that are available.  We do not just look at numbers.  We meet and talk with fund managers as often as we can and we have an extensive network of relationships in the fund and investment banking industries that we draw on for information and access.  We consider factors such as management tenure, depth of global research, and investment management process.  This aspect of our approach is a key differentiator from what most of our investors have experienced at their banks, brokers, and/or wealth management shops.

Risk Management

Large losses are insidious to building financial security and independence. From 2000 to 2010, circumstances for large portfolio losses (i.e. greater than 25% declines, peak to trough) occurred no less than five times. It is reasonable to expect we have not seen the last of such market declines–especially after a long period of steady economic growth. Yet, for many of us, the best approach is not to keep investable resources in cash. Our long-term security cannot afford the meager returns that cash investments yield.

Oak Grove’s risk management strategy includes taking a multi-pronged approach. Oak Grove constructs portfolios across a range of risk profiles and recommended time horizons. We use traditional and alternative asset classes to populate the portfolios according to the risk tolerance of each investor. We choose alternative asset classes based on specific statistical characteristics that are designed to lower portfolio risk. This aspect of our process provides a more effective means of building a meaningfully diversified investment portfolio. Finally, we supplement our approach with tactical risk management strategies as appropriate based on our assessment of capital markets opportunities.

Transparency/Conflict Avoidance

We receive compensation solely from our investors.  We do not work for a bank, brokerage, or insurance company. We have no incentives to use certain financial products over others, aside from our own determination that the product puts the investor in the best position to achieve the investor’s financial objectives. Our management incentives are aligned with the performance objectives of our investors. Simply put, if we conduct the due diligence on a product and decide to use it, the rationale for doing so is performance-based and not due to hidden fees or commissions.

Cost Control

Because we are performance and risk management driven, we are focused on cost control. We choose to invest in research, information and technology resources that enhance our capacity to make the best decisions for our investors. We have found that we can access world class investment products while controlling and optimizing costs. When it comes to direct expenses, we look to pay the lowest management fees for the third party managers we hire – as, for example, through institutional level share classes.

Ibbotson among others, suggest that over 90% of the variability in portfolio returns is attributable to asset allocation decisions over individual stock selection.