Portfolio overview
- The portfolio combines a strategic core of actively managed mutual funds with tactical holdings in passive exchange-traded funds (ETFs) and closed-end funds (CEFs).
- Our models use Natixis affiliate products alongside offerings from third-party managers.
- Our primary goal is to generate an above-benchmark income while taking on reasonable risk relative to that benchmark.
- Our secondary goal is to outperform the benchmark over a complete market cycle.
- The portfolio is managed with a 2–4% tracking error and is adjusted 4–8 times per year.
Portfolio construction
Portfolio construction is a four-step process:
Establish strategic allocations (annually)
Construct the tactical ETF and CEF overlay with a view toward maximizing income (ongoing with a 3- to 6-month horizon)
Conduct manager due diligence calls to monitor existing portfolio allocations (ongoing)
Monitor risk (ongoing)
We optimize our strategic allocations once annually and rebalance our holdings of traditional mutual funds at that time.
Thereafter the portfolios are adjusted on an ongoing basis via their ETF and CEF allocations, which represent approximately one-third of the overall portfolio.
Tactical views are developed by the portfolio management team in conjunction with the Natixis Investment Managers Solutions Investment Committee.
We execute 4–8 tactical trades per year within the ETF and CEF holdings.
The model is managed against a dedicated benchmark that guides our asset allocation decisions.
Portfolio alpha is generated by asset allocation, tactical trading, and manager selection.
