Hello, everybody and welcome. I'm Case Eichenberger, a Senior Client Portfolio Manager with Brinker Capital Investments. Joining me today is also Brian Story, Head of Discretionary Portfolios with Brinker Capital. Welcome Brian. And before we get started, Brian, maybe can you tell us a little bit about some of the key points that our viewers should be paying attention to today? Thanks for that, Introcase. I'm really excited that we have the opportunity to you know, share the great story we have regarding destinations and how in all parts of our process. We're building our portfolios to seek opportunities for strong returns, but at the same time taking advantage of diversification and portfolio construction techniques to control the risk levels. So whether that's in our dynamic asset allocation approach or manager due diligence process or our overall portfolio construction, we're keenly focused on delivering outcomes that have you know, fewer surprises. Are consistent with expectations and can really help overcome behavioral biases that often interfere with clients being able to remain invested in markets and truly benefit from the powerful wealth creating impact of long term compounding of returns. All right, yeah, thanks Brian. We know we feel here at Brinker Capital that the underlying principles that guide successful investments. Can really significantly enhance your chances of achieving your or your clients financial goals. And with that we'd like to get into some of the higher level thought processes of our investment philosophy. I'll talk here to start just a little bit about the diversification aspects. The active management and the portfolio construction and then I'll kick it back over to Brian to go a little bit deeper on all of these. So with this slide we we do like to paint the picture of really how diversified and how diversification can really help lower your risk overall in portfolio construction. A lot of other asset managers really just focus on two key aspects of portfolio construction and that is. Using stocks for the growth engine and stable fixed income as kind of that buffer when stocks do fall, but they're really missing out on that third leg of the stool, right, which is diversifying asset classes. And that is something at Brinker Capital that we've been doing for 25 plus years is really diversifying to all different areas which we do include absolute return, which are more pure alternatives. And also global credit which may be preferred stocks or high yield bonds. So just know that when you get a Brinker capital diversified portfolio, we are going well beyond what other traditional allocations may be which stop traditionally at just stocks and bonds. We will go one step further. Secondly with this slide I wanted to get across is we do focus on active management and Brian will talk about that a little bit further. But active management is very key to what we believe in to deliver successful outcomes and generate a rate of return that is comfortable for you and your clients. Active management is something that we believe wholeheartedly in. We will predominantly use active managers, active sub advisors within our mutual funds that make up these destinations portfolios. But we will also use some passive exposure in there for liquidity reasons or more tactical type bets we can make with the market and then finally is portfolio construction. Now this is going to carry over into the next slide, but we do talk a lot about the dynamic type of portfolio shifts that we are going to make within our portfolio construction. So we have portfolios from aggressive all the way down to conservative and we have portfolios that focus on income and also tax aware investments all within these. We are still going to be the active overlay manager on them and make dynamic shifts. As the marketplace warrants, I think a good example of this is the use of fixed income in the past couple years, right, fixed income managers, traditionally if you are just a static manager, you will just only have maybe 40% of your moderate portfolio in fixed income and you're owning benchmark like duration and benchmark like securities and and benchmark like credit risk profiles, but for us as dynamic managers. You know, we realize there are going to be some short term dislocations and that we need to take advantage of. One example is a few years ago in fixed income was you know, very low yields. The future opportunity set was much less pronounced if you will. So we would allocate more to our alternatives funds and all a little bit more to our global fixed income funds just. To pick up a little extra yield and diversify that interest rate risk that you had with low starting yields in traditional fixed income. So dynamic allocation is is a big part of it. Also, recently we were traditionally sliding back and forth between U.S. stocks and international stocks, right. We have a set baseline that we adhere to which is traditionally 70% US, 30% international, but there are going to be times where we want to own a little bit more United States stocks. And maybe a little bit more international stocks. So we will shift between those and just know that every time we make those trades, we will always identify them easily for you to talk to your clients with and communicate them with. So with that, I'd like to kick it back over to Brian to go a little bit deeper on some of these asset allocation portfolio thoughts we have. Yeah, case, that's an important point you made on how we've, you know, intentionally built our process. To not only utilize the advanced risk modeling tools that are available to us, but also to you know employ you know what I would call common sense guardrails from a risk management standpoint. Also to rely on the the judgment of our experienced portfolio management team. And so we talked about the dynamic asset allocation approach that we take and. And I'd like to spend a few minutes digging deeper into that. And so you know that aspect of our process we think is very important. And you know when we think about a dynamic asset allocation approach, what that means to us is we're actively seeking to capitalize on market dislocations that occur from time to time, but the time horizon that we're using for our analysis. Is an intermediate 2 to three-year type forward horizon and we think that sets us apart from some of our peers in the sense that many of them will either use a shorter term tactical asset allocation approach or a you know much longer strategic asset allocation approach that often feels more like a set it and then forget it approach with with little little opportunity to take advantage of those dislocations that do occur. And you know, we think that that our forward horizon really is a sweet spot where it's long enough that it enables us to rely on actual fundamental data and make judgments that are based on again fundamental data as opposed to shorter term, you know, tactical information like momentum or sentiment that's you know very hard to capture induces a lot more turnover. And it just has a generally a lower batting average of forecasting success. But it's but it's short enough that we are able to take care, take advantage of the opportunities that present themselves from time to time. Whereas you know longer term strategic approaches may just kind of you know miss out on those and this. So what we're looking at on this slide here is just an example of of how we think about opportunities that present themselves. And So what we see here is a relative valuation chart between large cap growth and large cap value over the past five years. And the the main thing to take away is that we had two periods in the years in which you know one of these periods growth was relative, it was very cheap compared to value stocks and the other value stocks were very cheap compared to growth stocks and so. This is just an example within this one asset or this one relationship, but this occurs across all kinds of asset classes, all kinds of portfolio decisions that we would make from time to time. You could think of bond yields where we had the 10 year treasury down around 1%, now you know just several years later up over 4%. Likewise, you could think of international versus U.S. stocks and they attracted us between those small caps versus large caps. So just an array of portfolio management decisions that are not static and opportunities are available and our approach is geared to take advantage of those opportunities, not to time the exact top and the exact bottom, but to take advantage of the opportunities when they present themselves. And as I said, this is just one you know valuations are a very important part of our analysis, but that's not the only thing we look at it from a fundamental standpoint. And so on the next slide we you know talk through some of the asset allocation decisions that we make, but also how we make those decisions. And so you think about the different data that are are available to us. We subscribe to a range of third party independent research providers that provide us with a lot of micro and macroeconomic data. We also do our own internal research. And then one thing that that does set us apart from many of our peers is that because we have active managers that we employ and we, you know, perform ongoing due diligence on these managers when we're having calls with them. We gather a lot of important insights from those managers. So it may be we're speaking with the bond manager and it's not they're just not telling us they like something or they don't like something. But the reasons why the data they're looking at to support their positions and that could cause us to then think a little bit more deeply or differently about some decision we're thinking about on the equity side. As as different drivers are you know considered and we get a more fuller view of of you know the economic landscape. And so when we think about our key asset allocation decisions they're you know the 1st and most important one is our total risk exposures. How much equity versus fixed income risk do we want to take, how confident are we in the equity markets. Or are we a little more cautious? Likewise there's decisions on where we want to be from a geographical standpoint. Do we want to have more exposure to domestic markets or do we want to you know take a little bit more exposure overseas. And so there were you know as we go through in a team based decision making process which is important because it helps us really gather a greater amount of insight with our experienced and and really. Deep portfolio management team we come to, we come to the our ultimate portfolio decisions and wait port, wait portfolios appropriately for our forward outlook. And so as case mentioned, our asset allocation is populated predominantly by active managers and so on the next slide when we think about the process that we employ. To identify active managers, I think the key thing is to take away is that it's a very robust process. It's a team based approach again which we think is very important because you know, it helps us often times avoid avoid heading down a path of groupthink or you know, you know, getting getting caught up in a particular viewpoint and it's great to have different team members with different backgrounds, different views. Really challenge each other, but do it in a very collaborative way. And so by doing that, it allows us to get to what we believe is ultimately an active manager that is going to provide returns and risk profile that's consistent with our expectations and that we have very few surprises along the way because we've done it a deep due diligence. We understand not only what they do, but why they do it. And you know most importantly we, we document our decisions and we come back and very frequently reunderwrite that manager decision. We, you know, we don't make a selection on a manager and then just kind of you know ignore them for the next quarter or year. We have quarterly, quarterly calls with our managers. We have a very robust quantitative and qualitative approach to our decision making process and again A-Team based approach in which we also leverage the Brinker due diligence team as well and their network of managers. And so really when we think about a search, we have, I would say the world, the world is our oyster and we have a lot of flexibility, a lot of availability. And the universal managers that we ultimately select and I think just you know the next, the next slide we'll just talk a bit about some of the key, key aspects from a more judgmental or or or you know less objective approach, less quantitative approach. But the things that we think about that really help drive our decision making process are. You know, we have to have a very clear understanding of what the manager is doing, why they're doing it. And most importantly is it likely based on our judgment and our experience that that strategy and that approach that they take will yield positive returns going forward. So it's not, it's not nearly as important what they've done in the past, but is the team, the process and the approach. Likely to deliver returns going forward that align with our expectations and the role we want that manager to play within our overall portfolio. And so you know moving now to portfolio construction, which as Case mentioned is a very key part of of our overall process. We think about portfolio construction in a couple different ways, one. Is at the overall portfolio level, how do we put together the different asset classes, overweight and underweight our exposures from an asset allocation standpoint. But I think the piece that that often times gets overlooked and is very critical to return enhancement but also to risk management is how within each asset class and the multi manager implementation that we utilize, how do we take. Multiple active managers and blend them together in a way that really accentuates the positives that they each have and mitigate, mitigate the idiosyncratic risks that any manager will have. And then it's very important because you know, we think about the managers that are most likely to deliver longterm outperformance are often ones that have concentrated portfolios, you know, higher conviction portfolios. Maybe a little bit higher risk profile on a standalone basis and so it's it would be a little bit difficult from a risk standpoint to own any of these managers in isolation. But the beauty of a multi manager implementation is that you can you can add multiple managers together that on their own we believe will do well and we have high conviction and every manager. In our in our portfolios, but by putting together complementary managers, ones that you know maybe you have a aggressive growth manager and a deep value manager, they're going to zig and zag at different points along the way. And so you're going to benefit from that diversification. By combining those managers, you're not losing any potential outperformance. But what you what you do do is you mitigate a lot of the risk of any of these managers on a standalone basis. And so you know when you think about our overall portfolio, the next slide is just sort of a a snapshot of the the breadth of sub advisors and managers that we are using within our. You know this is a moderate portfolio but it's generally the same across many of our portfolios. It will just be different weights to different asset classes, but we want to make sure that we use enough managers that we capture. A lot of different factor exposures we're able to offset any unintended risks that we don't want to be in the portfolio and try to mitigate away as much of the idiosyncratic manager risk as possible. So that we have, you know, again we maintain all of the alpha potential of these managers on a standalone basis, but but when we put them together, we mitigate a lot of the idiosyncratic risk. And just to wrap up before turning it back over to case would be remiss if we didn't talk a bit about our portfolio monitoring process and it's a very key, you know very key part of the process. As I said earlier, you know it really manager monitoring, portfolio monitoring is is not any different than the selection process. In fact it should just be a continuum. And a continuation of the selection process because for every manager, you know the reason that we selected them initially, the team, the process, all of those things that help support our decision to to add that manager to to use that manager for a particular role in the portfolio. The monitoring the process is just continually reaffirming that that manager is continuing to serve the role that it. Was selected for that. The team is still in place. The process is consistent and we have a continual belief that that manager can continue to serve the role that it's intended to have in the portfolio. And I think and we we have a range of different time horizons over which we perform different monitoring tasks or or activities. But most importantly is as we move out to quarterly and annually where. We'll have quarterly calls with all of our managers. We, you know, we sit down as a team review, performance review, any changes, review, any insights that any of us have had as we've talked to our managers or other managers in the same asset classes that might help provide some insight into questions we should ask our managers. And then on an annual basis we do when we conduct due diligence meetings. Onsite more recently during COVID, we had to had to do virtual meetings, but now we're back to a cadence of meeting onsite with all of our managers at least once per year and walking through a a a manager scorecard, which actually requires us to sit down and really document the different aspects of the manager that are working or not working. There's always going to be some aspects that. Of any active manager over a particular time frame are gonna be underperforming relative to expectations, but it's really looking at the totality and the holistic nature of that manager and what we're trying to achieve from that exposure and just making sure that it continues to exist. Excellent. All right. Thank you Brian for those insights. And really looking from my perspective, what I heard was was two big key items, right, superior risk management through thoughtful diversification and that's what we do best here as well as active management by identifying some of the best of breed sub advisors that are available here in the United States. A lot of them have obviously publicly listed funds, but some are institutionally ran that you really can't get access to. Sides through our portfolios. So those are the key aspects that we are looking for. And just to wrap it up, this is the models that we have available. So you can see risk based models from conservative all the way up to 100% aggressive equity and how diversified they are there between growth stable and diversifying asset classes. Know that there's also tax aware versions for all of those risk based models as well. And those will primarily use the use of municipal bonds for taxfree income at the federal level. And then finally income based portfolios are there for your clients that may be in distribution mode that need to generate a little extra yield, a little extra income than what the market's going to give you a loan. Obviously we focus more on dividend paints a dividend oriented stocks there and as well as a little bit more higher yielding bonds. So a good breadth of portfolios that are just perfect for we. Feel for a core part of your client's portfolio or if you are a client viewing this for your portfolio. So they are really very diversified to serve all types of environments and all types of market cycles. So we want to just thank you again for joining us and I would be remiss if I didn't talk a little bit about why destinations. A 25 plus year track record of managing money and it since the mid and late 80s. We have a dynamic asset allocation approach and a disciplined riskaware portfolio construction for our models. So thanks again for for joining us and if you have questions or would like to learn more, please reach out to the number on the slide or also your local relationship representative can help get in contact with us and answer any questions that you may have. After this webinar, thanks again. _1715176966725