Art & Science of Security Selection

Advantage & ETF Advantage Solutions

Process Over Prediction

At RiverFront, our selection process is routed in what we call "Process over Prediction". That’s not to say we think prediction engines are unimportant. We’ve invested significant time in building and continuously refining our analytical toolkit. However, we believe the key to deriving the most value from these tools comes from applying them in a systematic, repeatable process that combines analytical rigor with insight gained from experience.

Data, Insight & Risk Awareness

Our security selection process begins with the ‘science’ of analyzing historical market data. The ultimate security decision, however, is driven by the ‘art’ of interpreting the data through the filter of the collective experience and intuition of our investment professionals. We believe this process allows us to better focus on making decisions that are logical and unemotional, particularly in highly uncertain markets. We recognize as well that investor time horizon plays an important role in providing performance consistent with expectations. We address this by placing a heightened emphasis on risk management in shorter horizon portfolios and a greater focus on maximizing long-term total return in longer horizon portfolios.

Confident & Humble

Additionally, the impact of RiverFront’s culture can’t be overlooked. We’ve worked hard to create an asset selection process that expresses our unique investing point of view, and we’re confident in its ability to guide us. But we also have the humility to understand that continuously refining our process and accepting constructive input is what makes us better. Accountability is also built in through sharp decision rights, which clarifies ownership of the ultimate decision and creates decisive action. While we firmly believe in the power of collaboration and the open exchange of ideas, we don’t believe in investment decisions made by committee.

We manage multi-asset portfolios based upon investment time horizons, encompassing distinct processes for fixed income and equity security selection.

Equity Selection Process:

Our equity selection process allows us to invest in US, developed international, and emerging markets securities as we seek what we believe to be the best risk-adjusted return potential. In our core/satellite approach, our core portfolio is positioned in an effort to harvest the expected returns of equity markets cheaply and efficiently through broad market-like exposure and small tilts to factors we believe have long-term efficacy, such as value, high quality, and momentum. Our satellites, which can include ETFs and stocks, are selected to maximize our exposure to specific desirable themes, sectors, industries, countries, and stocks that our research process uncovers.

Fixed Income Selection Process:

Our fixed income security selection process uses traditional asset classes such as treasuries, agencies, mortgage-backed securities, and corporate bonds in combination with non-traditional assets like high yield, bank loans, and preferred stocks to foster yield for the portfolio. After deciding on the appropriate combination of traditional and non-traditional assets to use in portfolio construction, we then assess yield curve positioning based on the changes in the economy, market, and monetary conditions. This assessment will determine the yield and duration of the fixed income portion of the portfolio.

All investments in securities, including the strategies discussed above include a risk of loss of principal (invested amount) and any profits that have not been realized. Markets fluctuate substantially over time, and have experienced increased volatility in recent years due to global and domestic economic events. Performance of any investment is not guaranteed. In a rising interest rate environment, the value of fixed-income securities generally declines. Diversification does not guarantee a profit or protect against a loss. Investments in international and emerging markets securities include exposure to risks such as currency fluctuations, foreign taxes and regulations, and the potential for illiquid markets and political instability.

To learn more about our products and services please contact your financial advisor.