Frontier’s process is driven by our commitment to doing things right
For us, investment strategies are more than cold calculations. They are approaches to investing that reflect what’s important to our people, the advisors and firms we work with, and the investors they serve. Everything we do is informed by our own set of values.
Acting with purpose
Everything we do is deliberate and thought through – no needless risk or following the crowd.
We don’t take shortcuts and we don’t leave our work untended. We come in every day looking to improve our strategies.
Doing what we say
Our track record speaks for itself. We have been helping investors reach their financial goals for more than 20 years.
Downside First Focus® to set a baseline
Many traditional asset managers equate “risk” with the asset allocation percentage of equities vs. bonds in a portfolio, such as the well-known 60%/40% allocation. At Frontier, the number we focus on expresses the risk the investor actually cares about: the potential loss of wealth.
Before anything else, we establish downside risk targets for our strategies, representing the maximum expected one-year loss potential. Then, we draw from our forward-looking risk, return, and correlation expectations of 16 diverse asset classes to build each strategies’ target asset allocation. We seek the optimal asset mix holistically, rather than looking at each class separately. Our goal: to deliver competitive returns with less downside risk. Watch a video explaining what Downside First Focus® means to us.
Manager Match to find the best mix of independent managers
At Frontier, we want independent managers that pursue the best investment opportunities – end of story. Once we establish the target asset allocation of our strategies, we test millions of combinations of managers to determine the optimal team likely to produce the best results based on our analysis. These managers have met our stringent criteria, have, in our opinion, demonstrated skill in the past, and we believe they have the ability to perform in the future.
Many traditional asset management firms evaluate fund managers and sort them into “style boxes” that represent their investment approaches, and then pick top-performing managers in each box to fill a style slot in their overall portfolio allocation. They may even remove managers who try something new in search of returns because they no longer fit their box.
Dynamic Management to stay on course
If you want to keep risk constant, you must evolve to the ever-changing risks and opportunities in the markets. That’s why we don’t take a ‘set it and forget it’ approach with our strategies. We are constantly watching the performance of our strategies and the markets, and continuously update the inputs we use to run our calculations to reflect the market as it is today – not as it was when we created the strategy.
Specifically, we evaluate all strategies, funds and managers at least monthly to determine if we are on course. We have the ability to respond quickly – adjusting the manager mix and allocations dynamically (but not tactically) to stay on track within our downside risk target while optimizing for the best possible expected returns.
The result: Innovative risk-managed strategies made the Frontier way
We believe no other asset manager approaches investment strategies quite the way we do. We like to think that we are in the sweet spot – with the size and strength to offer a robust range of risk-managed strategies, while focused and independent enough to give each one its own unique, carefully crafted characteristics.
Strategy Management Process. Each Frontier strategy consists of carefully selected investment products that are combined in an effort to achieve the Performance Objectives of the strategy. Strategies are managed using a four-step process. First, we establish a long-term asset allocation mix that we call the “Target Long-Term Allocation”. Periodically we adjust the Target Long-Term Allocation based on our changing expectations about the future risk and return characteristics of various asset classes to create the “Target Current Allocation”. Next, we develop an “approved list” of mutual funds that we believe can add value over time. Finally, we test thousands of combinations of mutual funds from our approved list to find the combination that we believe is most likely to perform better than the Target Current Allocation. Over time the investment products in the strategy will change.
Adjustments to the Target Long-Term Allocation will typically be made within “Target Asset Allocation Ranges” that are established for the following asset class groups: US Equity, International Equity, Alternatives, Real Assets and Fixed Income. We have developed models that help us determine our future risk and return expectations for certain asset classes that fall within these groups. They are shown below. Some of these asset classes contain “sub-asset classes” (e.g., growth, value, mid-cap) that may also be represented in Frontier strategies.
US Large Stocks
US Small Stocks
Int’l Small Stocks
Int’l Large Stocks
High-Quality US Bonds
Floating Rate Securities Cash Equivalents
Not all asset classes are utilized in the construction of all strategies. Asset classes may be added to or removed from the above list at any time. The Target Current Allocation for a strategy may include asset classes that are not included in the Target Long-Term Allocation for that strategy. When determining the asset allocation for a strategy, each mutual fund is assigned to a single asset class. Funds assigned to an asset class group may have exposure to other asset classes.
Frontier ’s asset allocation models incorporate expectations for future long-term returns and downside risk. The estimates, including expected returns and downside risk, are calculated monthly by Frontier and will change from month to month depending upon factors, including market movements, over which Frontier has no control. They are only one factor among many considered in Frontier’s investment process. They hypothetical in nature and are not intended as guarantees of future returns and should not be relied upon in making investment decisions. All information provided within refers to our model strategies and does not reflect the trading any actual individual account. The estimates and expectations do not consider the impact of advisory fees or transaction costs. Please see Frontier’s ADV Brochure for details on fees.
Frontier Asset Management is a registered investment adviser with the U.S. Securities and Exchange Commission; however, such registration does not imply a certain level of skill or training and no inference to the contrary should be made. Additional information about Frontier and its investment adviser representatives is available on the SEC’s website at www.adviserinfo.sec.gov.
Frontier provides model strategies to various investment advisory firms and does not manage those models on a discretionary basis. The performance and holdings of model strategies may vary from the strategies managed by Frontier.
Frontier’s ADV Brochure and Form CRS are available directly on our website www.frontierasset.com or by request, at no cost by contacting us at 307.673.5675 or email@example.com. They include important disclosures and should be read carefully.