Investment Process

Objectives
Cahaba Wealth Management’s main objective is to design portfolios that generate the best possible return for the level of risk appropriate for each client. We begin our approach by fully understanding long-term cash flow and timing of asset needs through the financial planning process. We use our knowledge of the long-term plan, in conjunction with the clients personal risk tolerance to recommend an optimal investment portfolio. We then incorporate specific investments that fit each area of the desired portfolio to create a well-diversified and balanced investment strategy.

Selection of specific investments
The selection of specific investments is driven by many factors. We consider, corporate profits, growth forecasts, and various technical aspects in the current market climate. We factor into account interest rates, corporate profits and profit growth, and various technical aspects in the current market climate. We take this, along with research from various independent sources to create an overall thesis of current market valuations and expected growth rates.

After making asset allocation decisions, we select the specific investments appropriate to fill each particular asset class. This would include use of actively managed portfolios, indexes by way of Exchange Traded Funds (ETFs), individual bonds (both corporate and government), and in some limited cases, individual stocks. The use of any particular investment to fill an asset class is dependent on the client’s situation, and may change from client to client based on taxes, goals, time-horizon, etc… The initial portfolio is only the beginning, we continue to monitor market conditions and changes in the financial plan to determine if and when changes to the asset allocation and/or specific investments are warranted.

2 Main Types of Investments Used:

Actively managed mutual funds: In choosing money managers to fill certain parts of the portfolio, we utilize a screening process to make final selections. This screening includes, but is not limited to, the following factors:

  • strategies with expense ratios below the category average
  • Long management tenure
  • Management investment in strategy
  • Long term strategy outperformance
  • Management & Firm Stability
  • Transparency
  • Tax sensitivity

Passively Managed Index or Exchange Traded Funds: In choosing an index or ETF provider we utilize a screening process to make final selections. This screening includes, but is not limited to, the following factors:

  • Liquidity
  • Tracking error
  • Firm stability
  • Cost
  • Tax sensitivity
  • Structure