Investment Philosophy

At Lincoln Sparrow Advisors, our Investment Philosophy is based upon asset allocation and diversification paired with a client’s risk tolerance. We research money managers to determine which managers should be on our list of “Best in Breed Money Managers.”

The first step we take in determining our list of “Best in Breed Money Managers” is to establish the asset allocations of each of our portfolios. We use widely recognized broad asset allocations starting with:

• Income/Bonds Plus (20% Equity & 80% Fixed Income)
  
• Conservative (50% Equity & 50% Fixed Income)
  
• Moderate (65% Equity & 35% Fixed Income)
  
• Moderate Aggressive (80% Equity & @0% Fixed Income)
  
• Aggressive (100% Equity)

We have also developed some highly specialized portfolios that use slightly different allocations while also taking advantage of lower correlation alternative asset classes.

After determining the broad asset classes, we next determine the more detailed allocations using categories from large cap growth and value to international real estate. In most cases, we use at least eight sub-asset classes in each portfolio. We then break down the world of mutual funds into these sub-asset classes. By doing so we are able to compare managers’ styles and performance to other managers who are buying the same types of stocks. By following these specific research procedures we are able to identify our “Best in Breed Money Managers.”

We re-evaluate the managers on a monthly basis in order to determine whether our managers are still top performing fund managers. If we are concerned about the performance of one of our managers, that manager will be placed on probation and tracked on a weekly basis. If we determine that the manager is solidly performing, then the manager will likely stay on our list of managers. If we determine that the under-performance is due to a manager change, a shift in investment policy or just poor security selection, the manager may be replaced.

The last step in our approach is re-balancing. We re-balance on a bi-annual basis.