Basic Concepts Part 3

 ASSET ALLOCATION

Asset allocation is the process of selecting a mix of asset classes through efficient allocation of capital to those assets by matching rates of return to a specified and quantifiable tolerance for risk. The asset allocation models we use in designing a client’s investment portfolio are diversified into at least four (4) different sectors of the market in order to minimize sector and industry risk. Each model consists of a different “target” asset allocation, comprised of different asset classes – spreading capital among a variety of investments as opposed to investing in just one – creating a more prudent approach to managing risk.

The investment mix for each client is uniquely designed to achieve the desired investment return for the client. However, the selected equities and fixed income vehicles in a client’s portfolio are typically diversified into many stocks and bonds that are common to all client accounts. This is the only common denominator; from that point the composition mix and quantity of stocks and bonds in any given client account is completely subjective.

Such allocation guidelines are a representation of a typical account composition but should not be construed as absolute. Ultimately, the exact composition makeup and allocation of securities are determined by the client’s investment parameters, which can compose a more detailed and/or complex structure.

The Company’s portfolio-managed accounts are designed to suit each client’s investment needs, accessing international debt and equity markets with a foundation of mostly no-load, institutional funds. In addition, the Company may also recommend, from time-to-time, using other investment vehicles to achieve the client’s desired investment objective; such as: derivatives, closed-end funds, equipment leasing, real estate, private placements and other publicly traded securities.

FIXED INCOME PORTFOLIO ALLOCATION

The Investment strategy for fixed income portfolios is designed to capitalize on opportunities available during the interest rate cycle. Bonds also provide added diversification for accounts requiring lower volatility and higher income. Lyons Wealth Management, LLC’s objective is to pay close attention to the spreads between government and corporate bonds and invest according to each client’s investment goals and risk tolerance. Credit risk is determined through objective fundamental analysis. Municipal bonds may be utilized in taxable accounts where they provide a higher tax advantaged yield.

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