It’s about what clients earn AND what they keep
You may have heard “It’s not what you earn, but what you keep.” At Frontier, we know it’s both. While common tax-managed approaches focus first on minimizing distributions, doing so skews their ability to factor in risk and return potential. We start with our focus on minimizing downside risk, and then optimize our Tax-Managed Strategies for after-tax returns. The process includes analyzing the tax-efficiency of active and passive mutual funds and Exchange Traded Funds (ETFs)* as a variable in our selection process, steering asset allocation away from those that generate income, engaging in tax-loss harvesting year-round, avoiding large distributions, and generally executing trades only when the benefit outweighs the tax impact.
How do you maximize success for tax-smart investors?
By taking a different approach. See how.
Strategies designed to maximize after-tax return while minimizing downside risk
Each strategy has an approximate one-year downside risk target (ranging from -2% to -25%) and a target long-term allocation** shown in the pie charts below. Investors can select the strategy that best fits their needs and risk tolerance level.
Absolute Return
Investment Objective
Seeks to preserve capital.Purpose
Based on Capital Preservation strategy, but can invest in any combination of asset classes. Could be used for short-term obligations due within the next 1-3 years, as an alternative to short-term bonds, or for those assets investors do not want or need to be fully exposed to capital market price changes.
Capital Preservation
Investment Objective
Seeks to preserve capital.Purpose
Could be used for short-term obligations due within the next 1-3 years, as an alternative to money markets or short-term bonds, or for those assets investors do not want or need to be fully exposed to capital market price changes.
Conservative
Investment Objective
Seeks to preserve capital, and as a secondary objective, provide capital appreciation.Purpose
Could be used for short-term obligations due within the next 3-5 years, for investors who prioritize expected downside risk and consistency of returns, or for those invests who do not want or need to be fully exposed to capital market price changes.
Conservative Multi-Asset Income
Investment Objective
Seeks to preserve capital and provide current income, and as a secondary objective, provide capital appreciation.Purpose
Could be used for short-term obligations due within the next 3-5 years, for investors who prioritize expected downside risk and consistency of returns, as well as receiving dividends and income, or for those investors who do not want or need to be fully exposed to capital market price changes.
Absolute Return Plus
Investment Objective
Seeks to provide capital appreciation with moderate volatility.Purpose
Based on the Balanced strategy, but can invest in any combination of asset classes. Could be used to fill an allocation to alternative assets, obligations due within the next 5-10 years, or investors seeking to grow the value of their assets who also prioritize expected downside risk and consistency of returns.
Balanced
Investment Objective
Seeks to provide capital appreciation with moderate volatility.Purpose
Could be used for core lifetime family assets, obligations due within the next 5-10 years, or investors seeking to grow the value of their assets who also prioritize expected downside risk and consistency of returns.
Moderate Growth
Investment Objective
Seeks to provide moderate growth with moderate volatility.Purpose
Could be used for core lifetime family assets, obligations due within the next 10-15 years, or investors seeking to grow the value of their assets who also prioritize expected downside risk and consistency of returns.
Focused Opportunities
Investment Objective
Seeks to provide long-term capital appreciation with moderate volatility.Purpose
Based on the Long-Term Growth strategy but can invest in any combination of asset classes. Can hold up to 100% equity exposure but is actively managed to prioritize downside risk and to seek to improve consistency of returns. Could be used to fill an allocation to equity-oriented alternative asset.
Long-Term Growth
Investment Objective
Seeks to provide long-term capital appreciation via equity markets with moderate volatility.Purpose
Could be used for core lifetime family assets that are designated as equity exposure, obligations due within the next 15-20 years, or investors seeking to grow the value of their assets who also favor active management to moderate expected downside risk and improve the consistency of returns.
Global Opportunities
Investment Objective
Seeks to provide long-term capital appreciation via equity markets.Purpose
Could be used for investors seeking to grow the value of their assets through global equity market exposure. It is reasonable to expect the risk of this strategy to be similar to that of global equity indexes.
* Exchange Traded Notes (ETNs) may also be considered.
** Downside risk targets and target long-term allocations calculated as of December 31, 2022.
Tax-Managed Strategy key features
Some Tax-Managed Strategies offered by Frontier Asset Management are appropriate for use at the heart of a client’s portfolio, while others are complementary and help round out an investment portfolio.
- Make use of layered tax management strategies, including tax-efficient allocations, after-tax portfolio optimization, diversified bond positions and tax-loss harvesting
- Designed to seek the highest after-tax return while managing for downside risk
- Composed of active and passive mutual funds and ETFs from carefully researched independent managers
- Dynamically (but not tactically) managed to seek to achieve consistent performance in ever-changing markets
Let’s talk about how Frontier can help you succeed
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Notes
Frontier does not provide tax advice.
Strategy Management Process. Each Frontier strategy consists of carefully selected investment products that are combined in an effort to achieve the Investment Objective of the strategy. Strategies are managed using the following 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 investment products that we believe can add value over time. Finally, we test thousands of combinations of investment products 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 most likely change.
The “Downside Risk Target” is a financial risk measure that represents the approximate one-year loss potential an investor is willing to assume. It is designed to help investors choose their desired strategy based on their individual risk tolerance. It is the starting point for the design of each Frontier strategy. The downside risk target is for informational purposes only. There is no guarantee the downside risk target will be achieved. The downside risk target does not represent the performance of any individual account and should not be assumed to be consistent across all portfolios in a Frontier strategy. There are frequently material differences between potential loss levels and actual performance. The downside risk target does not consider the impact of trading, nor does it contemplate advisory fees. It should not be assumed that an investor will experience a consistent potential loss over any period of time or on a long-term basis. No investment decision should be made solely on the downside risk target associated with any Frontier Strategy.
Exclusive reliance on the above is not advised. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Assumptions, opinions and estimates are provided for illustrative purposes only. They should not be relied upon as recommendations to buy or sell any securities, commodities, treasuries or financial instruments of any kind. This material has been prepared for information purposes only and is not intended to provide, and should not be relied on for, accounting, legal, investment or tax advice.
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 info@frontierasset.com. They include important disclosures and should be read carefully.