In November 2010, Charles Schwab acquired the assets and intellectual property of Winward Investment Management (now operating under the name Windhaven Investment Management). In doing so, Schwab now offers the three Windhaven money manager strategies to its retail clients, providing a distinct approach to investing for growth and risk management.
The Windhaven strategies have grown in popularity since Schwab’s acquisition, though many investors may be unsure of how each strategy differs in its approach.1
Which of the Windhaven Investment Management strategies is right for you?
The Windhaven Portfolios: Money Manager Strategies for Different Levels of Risk
The three Windhaven Strategies are made up of highly diversified asset classes including US, international, and emerging markets equities, fixed income, commodities, real estate, and currencies in an attempt to protect against a wide range of risky assets.
The portfolios primarily use ETFs to build-out the strategies, so if you were looking to create a portfolio comprised of individual stocks and bonds, these strategies may not be the right solution for you.1
Below we’ll take a look at each of the three strategies, which vary based on how much risk you’re willing to take (risk tolerance) and the length of time that you’re looking to invest.
Windhaven Diversified Conservative
Risk Tolerance = Low
Investment Time Horizon = Less than 5 years
If you’re in the late stages of retirement and have significant income needs, the Windhaven Diversified Conservative strategy could make sense as part of your investment plan. The strategy attempts to earn returns in excess of inflation over time while maintaining a focus on downside risk management. It maintains a modest exposure to equities, and instead keeps a focus on fixed income securities.2
Windhaven Diversified Growth
Risk Tolerance = Moderate
Investment Time Horizon = Greater than 5 years
For those investors who are looking to achieve some level of long-term growth but also wish to limit volatility along the way where possible, the Windhaven Diversified Growth strategy could be a good choice. It takes on more risk than the Diversified Conservative strategy, with greater exposure to US and international equities. It seeks to achieve equity-like returns while exhibiting less volatility and maximum drawdown over full market cycles.3
Windhaven Diversified Aggressive
Risk Tolerance =High
Investment Time Horizon = 10 to 15 years or greater
If your investment objective is long-term equity-like returns, and you can handle greater volatility over time, the Windhaven Diversified Aggressive strategy might make sense. It has a majority of assets invested in US and international stocks, and seeks to aggressively take advantage of global capital market opportunities while exhibiting less volatility and maximum drawdown than conventional equity portfolios over full market cycles. Investors considering this strategy should possess an ability to withstand a permanent loss of capital.4
Learn More About the Windhaven Strategies
If you would like detailed performance information on any of Windhaven Investment Management’s strategies, please give one of our Wealth Managers a call at 1-800-541-7774 or request the information here.
Seton is a CERTIFIED FINANCIAL PLANNERTM professional and Vice President of Investments at WrapManager, Inc.
Sources:
2 Windhaven Investment Management
3 Windhaven Investment Management
4 Windhaven Investment Management
Strategy descriptions listed represent a brief outline of the portfolio’s objective. There is no guarantee that any manager or product will be successful in achieving the objective described. The strategy used by the money manager listed is not suitable for all investors. This material does not represent a personalized recommendation and does not reflect individual investor’s risk and return goals nor does it serve as the receipt of, or a substitute for, personalized advice from WrapManager, Inc. or any other investment professional.
