Philosophy

There is no single approach to wealth management that will suit everyone. At Centerpoint Advisors, we work closely with our clients to determine which combination of risk and return fits their profile. We employ industry leading asset allocation, financial planning, and aggregated reporting technology to help investors understand their options and reach the balance that is just right for their needs. Above all, the value we place on long-term investment discipline keeps us focused on our sole objective: maximizing our clients’ risk-adjusted returns. Armed with the objective and independent information we provide, our clients are positioned to make sound financial decisions and realize their long-term goals. Whether you are a business owner, an executive, or and individual investor, Centerpoint Advisors can create a customized plan to meet your needs.

The Intelligent Index Model
Fixed Income Management
Aggregated Reporting

The Intelligent Index: A Disciplined Investment Strategy

Developed in 2001 by Centerpoint Advisors, the Intelligent Index Portfolio is a dynamic asset allocation program that utilizes highly liquid Exchange-Traded Fund (ETF) shares of the S&P 1500. Intelligent Index provides broad representation among all major capitalizations while applying rules-based discipline for portfolio weighting between growth and value styles. The Intelligent Index Strategy will provide:

- - Dynamic asset allocation – two asset allocation rules.
  - Equal exposure across capitalization and investment styles.
  - A Reasonable amount of risk – portfolio’s three year beta: 1.01.
  - A Cost-efficient and tax-effective way to participate in broad equity market returns using a strong asset allocation discipline.

Research Background

- - In an effort to capture excess returns derived from the outperformance of the growth and value style, we began examining returns of six Wilshire style and capitalization classified indices dating back to 1978.
  - In conjunction, we tracked the returns for our Model Portfolio of six S&P/Barra style and capitalization classified indices, starting with data from 1994.
  - For both datasets, we evaluated quarterly returns from each style and capitalization in comparison with the broad market, while searching for predictable market trends that might be exploited to boost returns.
  - In our analysis, we discovered recurring periods during which either the growth or value style would outperform its counterpart.
  - These periods generally exhibited two trends:
  - “All Down” trend: Negative quarterly returns for the S&P 500 and all six Wilshire and Barra indices evidenced broad market weakness and indiscriminate selling. The weak quarter was typically followed by robust equity returns where performance was led by growth.
  - “Selective Market” trend: When returns for the S&P 500 were negative for the quarter, but one or more of the six Wilshire and Barra indices had positive returns, the market had typically become defensive and selective. In uncertain and selective markets, company valuations increased in relative importance to investors, and value generally outperformed growth.

Guided by these compelling long-term market indicators, we constructed the Intelligent Index Model Portfolio – a strong investment vehicle ensuring broad equity exposure across investment styles and asset classes, and achieving enhanced returns through a process of disciplined dynamic asset allocation. Research and due diligence on the Model Portfolio is ongoing and consistent. Management is supervised by the firms Managing Principals and Directors with the assistance of Mark Barry, Associate Portfolio Manager, and Matthew Okaty J.D., Compliance Analyst and Project Manager.

Benefits

- The Intelligent Index avoids some of the potential pitfalls associated with actively managed mutual funds by investing in proxies of the benchmark indices.
- Indexing provides diversified exposure to a market or sector.
- Index tracking has been proven to outperform the majority of actively managed funds for most asset classes and styles.
- Index strategies are cost-effective and tax-efficient.
- The Intelligent Index asset allocation process is applied consistently to give investors exposure to both growth and value style in small, medium and large capitalization companies. The process is implemented irrespective of market environments and investor psychology in a cost effective manner.

Fixed Income Services

Our Fixed Income division provides a wide range of services to a broad clientele. Led by our Director of Fixed Income, John E. Wolfsberg, the division specializes in institutional fixed income services for Retirement Plans, Trusts, Endowments, and High Net Worth Individuals. Some of our portfolio management services and management disciplines are provided below.

Services include:

Investment Policy Development and Review: We are often approached by Endowments and Retirement Plans to assist in the management of their fixed income assets. Many times these entities do not have an Investment Policy and in some cases no policy at all. The creation and development of an Investment Policy Statement is an essential part of the fiduciary responsibilities of plan trustees and provides a framework by which investment decisions are made. We work with those entities that do not have an Investment Policy in developing a policy that meets the needs of their organization. In addition to Endowments and Retirement Plans, we also encourage our individual clients to work with us in developing a personal Investment Policy Statement in order set clearer goals and parameters for their portfolios.

Fixed Income Research: Our main focus in the management of our fixed income portfolios is capital preservation. Accordingly, our portfolios are constructed using high quality fixed income securities. When selecting securities for possible inclusion in a portfolio, our process does not simply rely on the ratings assigned by the ratings agencies. In addition, fundamental research analysis is performed to gain an understanding of the overall financial health of an issuer. Once we have determined that an issuer’s financial health is solid, only then does it become a viable candidate for inclusion in the construction of a portfolio. With regard to municipal securities, our purchases are typically limited to General Obligations (State Level and Major Cities), essential revenue or pre-refunded debt.

Portfolio Construction: As previously stated, our emphasis in the fixed income market is on high quality securities. However, even the highest quality issuers can experience an unexpected disaster (oil spill, natural disaster, etc.) which can temporarily (or sometimes permanently) impact the value of their fixed income securities. As such, our portfolios are constructed with an emphasis on diversification so that no single issuer represents a significant portion of the overall portfolio. In addition, we closely monitor exposure to sectors so that a portfolio is not overly exposed to a single sector. When purchasing securities we typically select large global issues that are well quoted and traded by multiple dealers. This ensures accurate pricing, liquidity, and facilitates efficient trade execution.

Taxable vs. Tax Exempt Income Analysis: The question of whether to invest in taxable or tax-exempt securities is not always a simple question to answer. A client’s current tax bracket as well as projected tax bracket are important factors to consider. In addition, yields in both the taxable and tax-exempt fixed income markets will impact this important decision. We work with our clients in formulating a strategy that provides for the best after tax yield. Markets change, so often clients may benefit from having taxable securities at one point in time while tax exempts at another. Our constant monitoring of the market levels ensures clients are investing in the correct markets at a given point.

Trade Execution: The fixed income market is a negotiated market. Unlike a stock exchange, where stocks often trade in a relatively tight range, bonds often trade at levels that can be significantly higher or lower than trades in the same security at virtually the same time. Bond prices can be impacted by such factors as the credit rating, the size of the issue, block size, issuer specific news, etc. As such, trade execution is critical to the overall performance of a portfolio. Having a complete understanding of the market and where various issues are currently trading is essential to managing a portfolio. Our fixed income head is focused exclusively on the bond market and continuously monitors the markets looking for opportunities in mispriced fixed income securities.

Performance Reporting: Providing timely and accurate performance reporting is essential to the evaluation of a portfolio. Our reporting platform is recognized in the fixed income industry as a leader in performance reporting. Our financial and accounting background allows us to efficiently analyze the performance data in order to make timely and strategic portfolio changes when necessary. Our portfolio review process includes client reviews (meetings or calls) on a quarterly, semi-annual or annual basis depending on the needs of the client or organization.

MyCenter Client Portal: Aggregated Reporting and Document Storage Service

Centerpoint clients will always experience complete transparency and convenience, and may choose to use our aggregated reporting and document storage service, MyCenter. Through this portal, clients will be able to see the asset allocation of not only those accounts held through Centerpoint, but also those managed by other advisors, to provide a true portfolio snapshot for the individual or family. The portal also includes a secure document vault to safely store estate documents, insurance policies, and other important personal information. In addition, shareable access can be customized. For example, if a client wishes to share documents relative to tax filing, they are able to give their CPA access to these, and only these, documents if they wish. For more information about MyCenter, contact Compliance Analyst and Project Manager, Matthew Okaty.