Process

Forstrong employs a multi‐disciplined approach in determining an optimal global asset mix defined by risk, reward and diversification/composition requirements. Our firm methodically surveys a wide array of global economic and financial conditions in order to assess the relative attractiveness of the major asset classes and asset types — stocks, bonds, cash, and alternative assets.All active strategies for actual portfolio mandates are expressed proportionately

Asset Mix Process

On a regular quarterly basis, the Forstrong Investment Team (FIT) determines the relative desirability of the major asset types by grading them according to 10 groups of criteria and conditions as described below. Many factors influence the relative investment return prospects of global financial asset classes and are graded according to their favorability or hostility to the performance prospects for each.

Broadly, the relative influence of the factors surveyed in determining asset mix policy can be categorized as follows:

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Fundamental Factors and Conditions

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Qualitative Assessments

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Risk/Return Characteristics

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Quantitative Ratings

Asset Mix Ranges

Though asset mix ranges for any given portfolio are determined by the nature of investment objectives — low risk, high income, aggressive growth … etc. — basic investment policy is expressed in terms of the Forstrong Global Balanced Portfolio Benchmark. All other investment mandates are linked to this base strategy and are expressed proportionately. The weighting ranges for each of the major asset classes of this hypothetical portfolio are shown below.

COMPONENTS OF GLOBAL ASSET SELECTION MODEL

The following seven categories of factors are considered in determining the relative attractiveness of the three main financial asset classes. The Asset Mix Score Sheet portrays this grading exercise. Ratings are weighted and summed to indicate the relative attractiveness of an individual asset class. A high relative rating will recommend a portfolio weighting for that particular asset class towards the higher end of its allowed range (see previous page). Conversely, a low rating relative to other investment classes will force a portfolio weighting towards the lower end of that asset class’ prescribed range.

All of the following categories have separate defined methodologies and approaches.