Our investment process incorporates multiple Nobel Prize winning theories that have been widely adopted throughout the investment advisory industry. Specifically, we believe that over the long-run, capital markets are efficient and mean reversion can be quantified and exploited. As such, each broad asset class is bound by upper and lower allocation bands that allow sufficient flexibility to hedge or capture returns based on macro-economic analysis while also retaining expected portfolio risk characteristics. This core asset allocation process helps to limit losses, create incremental gains and boosts overall portfolio efficiency.

Additionally, our portfolio construction process includes both active and passive managers to fill the various asset allocation sleeves. The passive/active decision matrix for each asset class includes many inputs such as the business cycle, current valuations, and an understanding of how portfolio Alpha is created by active managers in specific asset classes.

On the periphery, Deer Creek Capital uses small tactical allocations (3-5%) to specifically target perceived valuation anomalies where timing is of immediate importance. This “hub and spoke” tactical process allows us to look for “alpha drivers” (spokes) that exist outside of the core (hub) strategy for each portfolio. These small tactical “spokes” provide the opportunity to create portfolio alpha by targeting inefficiencies in smaller, less followed asset classes.

Advisory services offered through Deer Creek Capital, a Member of Advisory Services Network, LLC