Pursuing Opportunities While Preparing for Out-of-the-Blue Events
Windhaven's fluid and proactive approach analyzes a wide range of factors and allocates to positions that align with the perceived ebb and flow of changing economic cycles.
While risk can never be entirely eliminated, traditional approaches can underestimate true portfolio risk by only focusing on past events, such as the tech bubble or credit crisis. Windhaven® looks ahead—at potential extreme conditions that might seem improbable, but may be more likely than people think.
The goal? Less volatile, sustained performance, as opposed to "win big, lose big" Wall Street performance as usual.
Each market cycle tends to favor different asset classes.1 Windhaven® dynamically moves across and within those asset classes, primarily using low-cost index exchange-traded funds (ETFs) and adjusts allocations as it sees opportunities arise or risks appear:
Built on extensive research into the cause-and-effect relationships that drive the global capital markets, Windhaven’s investment approach consists of five steps:
The Windhaven Investment Approach
Stephen Cucchiaro, Windhaven's Chief Investment Officer.
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1. These relationships do not always hold true, and there are periods of time when all asset classes might decline simultaneously.
2. Hard assets include commodities and precious metals.
Please refer to Windhaven's ADV Part 2 for more information.
Windhaven's risk-management process includes an effort to monitor and manage risk, but should not be confused with, and does not imply, low risk, or the ability to control risk.
Some specialized ETFs can be subject to additional risks. Investment returns will fluctuate and are subject to market volatility such that an investor's shares, when redeemed or sold, may be worth more or less than their original cost.
There are risks associated with any investment approach, and Windhaven strategies have their own set of risks to be aware of. First, there are the risks associated with the long-term core strategic holdings for each of the strategies. The more aggressive the Windhaven strategy selected, the more likely the strategy will contain larger weights in riskier asset classes, such as equities. Second, there are distinct risks associated with Windhaven strategies' shorter-term dynamic allocations, which can result in more concentration towards a certain asset class or classes. This introduces the risk that Windhaven could be on the wrong side of a tactical over- or under-weight, thus resulting in a drag on overall performance.
Windhaven Diversified strategies are available through Schwab's Managed Account Connection™ program. Please read Schwab's disclosure brochure for important information and disclosures relating to Schwab Managed Account Connection and Schwab Managed Account Services™.
Portfolio management is provided by Windhaven Investment Management, Inc. ("Windhaven"), a registered investment advisor. Windhaven and Charles Schwab & Co., Inc. are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation.