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Philosophy & Process Portfolios that hold both fixed income and equity investments may have either a client stated allocation among the asset categories or a variable allocation determined by Colony Capital to the asset classes based on market conditions. However, regardless of the approach chosen, the asset allocation decision is of extreme importance to the long-term investment results and is a primary determinant of the risk (volatility of returns) the portfolio incurs. Depending upon client needs and circumstances, we can assume responsibility for changes in asset allocation based on risk profile and market conditions. In this instance, the IPC would consistently analyze economic conditions and market valuations and minimize or maximize an asset class based on expected investment returns and the risk profile of the client. The other approach we implement for balanced accounts involves a consistent (quarterly) re-balancing to a predetermined strategic asset mix. This asset mix would be determined, in conjunction with the client's consultant, through an analysis of the client's long-term (strategic) investment objective and risk profile. Many independent studies have documented the value added by this methodology and it is our recommended approach to clients in the absence of any significant client based objective. Of course, once the appropriate approach to asset allocation has been determined, our Growth Equity and Intermediate High Quality Fixed Income styles would be implemented regardless of the overall asset mix.
*50% S&P 500/50% BCIT Periods over one years are annualized. Performance results reflect total fund returns which include the reinvestment of dividends and interest. Past performance is not indicative of future results. Please see full disclosure. Performance shown is for periods ending 9/30/08.
Colony Capital Management has prepared and presented this report in compliance with the Global Investment Performance Standards (GIPS®). The CFA Institute has not been involved with the preparation or review of this report. These results have been prepared and presented in compliance with GIPS® beginning 1/1/93. The composite was originally created in 1985. From 1/1/92 forward, composite performance is asset-weighted; prior to 1/1/92, the firm’s balanced composite was equal-weighted. Composite performance is presented both gross and net of investment management fees. Since 1/1/93, composites have been valued monthly and portfolio returns have been weighted by using beginning-of-month market values. The dispersion of annual returns is measured by the range between the highest and lowest performing portfolios in the composite. As of 9/30/08, the composite included 2 accounts and totaled $6 million which represented 5% of the firm’s total assets, 12% of the firm’s total balanced assets, and 30% of the firm’s discretionary tax-exempt assets managed in this product. There is no minimum asset size below which portfolios are excluded from a composite. A complete list and description of the firm’s composites is also available. Performance is expressed in US dollars. Performance results reflect total fund returns which include the reinvestment of dividends and interest. Interest income and dividend income (beginning 1/1/05) is accounted for on an accrual basis. Trade-date accounting is used. This composite does not contain any non-fee paying portfolios. For the trailing five years, the lowest performing component returned 3.96% annualized; the highest returned 4.58% annualized. Past performance should not be used as an indication of future results. Colony Capital Management is an independent investment adviser established in 1971 and is registered with the SEC. Firm assets represent the total assets under management of all fee-paying, discretionary portfolios. The composite includes all discretionary, nontaxable, non-individual balanced portfolios. After the appropriate asset allocation decision is defined, our Growth Equity and Intermediate Fixed Income styles are implemented.
*Balanced account dispersion is due primarily to differences in client-directed asset allocation. Gross-of-fees performance returns are presented before management fees, custodial fees, and withholding taxes but net of all trading expenses. The annual fee for Balanced investment advisory services is based on the market value of the assets under supervision. The fee formula is: 0.75% on the first $10,000,000; 0.50% on the next $20,000,000; 0.375% on the next $20,000,000. Management fees will vary with both the product being considered and the account size. This published fee schedule is also disclosed in Part II of Form ADV, as filed by the firm with the Securities & Exchange Commission. For example, a $10 million portfolio with a 9% return each year would appreciate to $23.7 million at the end of 10 years when compounded annually. If the same account were subjected to an annual management fee of .75%, the portfolio would be worth $22.1 million at the end of 10 years. Annual returns are time-weighted rates of return calculated by linking monthly returns. Additional information regarding the firm’s policies and procedures for calculating and reporting performance results is available upon request. The benchmark is 50% each of the S&P 500 and Barclays Capital Intermediate Treasury Index. As of 9/30/08, the composite and S&P 500 have the following characteristics respectively: Trailing 12 month PE 15.3/22.5; Next 5-yrs Earnings Growth 13%/12%; Return on Equity 22.9%/10.1%; Dividend Yield 1.5%/2.5%; Beta 1.0/1.0. The composite and Barclays Capital Intermediate Treasury Index have the following characteristics respectively: Average Duration 2.3/3.7yrs; Average Maturity 2.5/4.2yrs; Yield to Maturity 2.2%/2.6%; Average Coupon 3.8%/4.2%.
*Balanced Index=50% S&P 500/50% Barclays Capital Intermediate Treasury Index Home | Growth Equity
| Balanced © 2008 Colony Capital Management, Inc. |
