Asset Optimization® Portfolios
Customized for you. Optimized for your risk tolerance level.
Working within the framework of Mercer Advisors' Quantitative Investing strategy, our investment specialists manage hundreds of portfolios we call the Asset Optimization portfolios. Beyond basic asset allocation, our Asset Optimization methodology focuses on sophisticated portfolio design using academically validated research to maximize return at each client's defined risk level.
Our Asset Optimization portfolios range in composition from 100% stocks to 100% bonds with hundreds of variations between them. Each portfolio contains a mix of broadly diversified asset classes, each comprised of thousands of companies. The stock portion of each portfolio is optimized by its tilt (or emphasis) toward international stocks, small company stocks, value stocks, momentum stocks, managed futures and real estate exposure.
By offering a diverse range of options, we are able to align the portfolio design with each individual’s unique needs, objectives, risk tolerance and time horizon while maintaining the integrity of our investment strategy.
The "Core Four" Portfolios
We have chosen four representative portfolios from among the hundreds we offer to illustrate the spectrum of risk and return available within our Quantitative Investing strategy. We call these portfolios our “Core Four”. They range from aggressive to conservative in design.
Important: Each "Core Four" portfolio has a stock allocation of 35% international as well as a strong weighting toward small company, value and momentum stocks. These weightings - along with the stock-to-bond ratio - are customized for each client. Additional asset classes, such as U.S. and International REITs, are also available to further customize a client’s portfolio. It is this customization process that has defined the hundreds of portfolios that we manage. Furthermore, when appropriate, assets may be allocated to our Tax-managed or Fixed Income Separate Accounts as part of the design process.
The Mercer Advisors "Core Four" Portfolios illustrate a spectrum of risk and return:
Aggressive AO Portfolio (100.35.3)
- 90% Stocks and 10% Managed Futures
- Stock allocation includes 35% International with a strong weighting toward small company, value and Momentum stocks
- Expected Return1 = 10.56%
- Expected Risk2 = 16.63%
The Aggressive portfolio is comprised of an allocation of 90% Stocks and 10% Managed Futures; its primary objective is aggressive growth. With no bond allocation, this portfolio is one of the most aggressive products we offer. It is designed for clients with a high tolerance for volatility and/or those with a long-term time horizon.
Moderate AO Portfolio (80.35.3)
- 72% Stocks, 8% Managed Futures and 20% Bonds
- Stock allocation includes 35% International with a strong weighting toward small company, value and Momentum stocks
- Expected Return1 = 9.19%
- Expected Risk2 = 13.22%
The primary objective of this portfolio is moderately aggressive growth. With only a 20% bond allocation, it is still one of the more aggressive portfolios we offer. This portfolio is designed for clients with a moderate tolerance for volatility and/or those with a medium-term time horizon.
Balanced AO Portfolio (60.35.3)
- 54% Stocks, 6% Managed Futures and 40% Bonds
- Stock allocation includes 35% International with a strong weighting toward small company, value and Momentum stocks
- Expected Return1 = 7.80%
- Expected Risk2 = 9.88%
The Balanced portfolio has an allocation of 54% Stocks, 6% Managed Futures and 40% Bonds. The dual objective of this portfolio is a balance between moderate growth and moderately low volatility. Its 40% bond allocation offers a conventional portfolio for clients with a low tolerance for volatility and/or those with a relatively short-term time horizon.
Conservative AO Portfolio (40.35.3)
- 36% Stocks, 4% Managed Futures and 60% Bonds
- Stock allocation includes 35% International with a strong weighting toward small company, value and Momentum stocks
- Expected Return1 = 6.38%
- Expected Risk2 = 6.58%
The Conservative portfolio is comprised of an allocation of 36% Stocks, 4% Managed Futures and 60% Bonds. The primary objective of this portfolio is preservation of principle. With a 60% bond allocation, it is one of the more conservative portfolios offered by Mercer Advisors. This portfolio is designed for clients with a low tolerance for volatility and/or those with a shorter time horizon.
1Expected returns are not actual Mercer Global Advisors Inc. ("Mercer Advisors") portfolio returns and may vary from what Mercer Advisors investors have received or will receive in similar portfolios. The expected returns are based upon Mercer Advisors' professional opinion and upon historical index data. Therefore, Mercer Advisors does not guarantee that an investor will achieve the expected return. Expected returns assume the reinvestment of all estimated earnings less expected management fees and underlying mutual funds internal administrative expenses and transaction fees. Furthermore, as with any expected returns, active management decisions may be made based on material economic and market factors at the time that could impact actual results. Thus, expected returns are not necessarily indicative of the actual returns that a managed account may receive.
2Standard deviation: The statistical measurement used to express the degree to which an individual value in a probability distribution varies from the mean of the distribution.
Mercer Global Advisors Inc. is registered with the Securities and Exchange Commission and delivers all investment-related services. Mercer Advisors Inc. is the parent company of Mercer Global Advisors Inc. and is not involved with investment services. Forbes and Investment News rankings are for Mercer Global Advisors Inc.
