The KCM Dynamic Risk-Based model strategies are designed to fit an individual’s current risk tolerance level.
The models are built with equity and income-based mutual funds or ETFs, depending on the custodian’s investment offering.
Each model’s objective depends on risk level. For example, the KCM Dynamic Conservative portfolio is designed to be a comprehensive investment solution for individuals who are conservative in their tolerance for risk. In general, the individual appropriate for this portfolio is one seeking growth of capital but who is less willing to assume large fluctuations in the financial markets, and may need to access their retirement funds in the near term.
On the other end of the spectrum, the KCM Dynamic Aggressive portfolio is appropriate for individuals looking for growth of capital, willing to assume larger fluctuations in the financial markets, and does not need to access their retirement funds soon.
Here’s an example composition:
We utilize Modern Portfolio Theory and take into account aspects of Behavioral Finance and forward-looking financial market conditions. Our process is based on a combination of tactical and strategic investment principles designed to optimize the asset allocation. We use equity and income-based mutual funds or ETFs to implement strategies.
Our Valarian Equity Exposure strategy can be combined with these models, which would take equity holdings to cash during bear markets or major market corrections.
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Our Smart Glide target date (aka “Lifestyle”) model stategies are based on the glidepath concept: that an individual’s risk tolerance usually decreases over time as they get closer to retirement.
The benefit to the individual investor is clear: they are able to invest in one option and not worry about making changes as their risk tolerance shifts when they approach retirement.
KCM Smart Glide target date strategies are “intelligent” because they:
KCM Smart Glide strategies are adjusted periodically and managed “To Retirement,” which is a glide path targeting the retirement date as the point where the portfolio risk is at its lowest. Retirement typically represents end of the Wealth Accumulation Stage and beginning of the Distribution Stage.
Target date models are well-suited as a qualified default option.
Here is a sample glidepath: