Centurion Counsel’s methodology is based on Modern Portfolio Theory, developed by Harry Markowitz (University of Chicago) and William Sharpe (Stanford University) for which they were awarded the Nobel Memorial Prize in Economic Sciences in 1990. Modern Portfolio Theory emphasizes that portfolios may be constructed to optimize expected return on a given level of market risk, emphasizing that risk is an inherent part of higher reward. Centurion Counsel’s investment professionals temper that theory with current economic conditions and market status into a Strategic Asset Allocation (SAA) that is unique for each client and that attempts to reduce portfolio risk by diversifying assets that move in different directions.
Centurion Counsel uses a variety of software programs that contain historic market performance and correlation to “optimize” a client’s portfolio. Our investment team analyzes risks and reward parameters of a prospective client’s current portfolio prior to designing alternative portfolios that may have higher or lower volatility and rewards compared to the client’ current portfolio. In some cases, the client’s current portfolio may include assets which are integrated into the alternative portfolio options because they meet the optimized requirements or the client has specified special social, religious or philosophical limitations for the portfolio design. The client, whether institutional or individual, has final authority to determine the risk and reward objectives as proposed by the alternative portfolios presented to the client. The resulting Strategic Asset Allocation focuses on relatively broad asset classes (i.e. stocks or bonds). The focus then will be made on identifying different classes of assets that have demonstrated different behavior characteristics from each other during various economic and capital market cycles. Different asset mixes provide alternative combinations of risk and reward and take advantage of sophisticated models and methods. At the same time, goals are always clear, measurable and subject to each client’s approval.