Portfolio Implementation
Instead of the fund manager merry-go-round, HPM focuses on bid-ask spreads, volume, and premium/discount levels. No calendar rebalancing. Trades happen when your clients’ portfolios drift, not when the quarter ends.
Because I’m not focused on evaluating active managers every quarter, I can focus on trading your clients’ portfolios as efficiently as possible. Instead of the fund manager merry-go-round, HPM focuses on bid-ask spreads, volume, and premium/discount levels, and considers the impact of ticket charges. A singular, long-term philosophy makes it possible to minimize tickers where appropriate for smaller accounts, or add tickers to enable more tax-loss harvesting opportunities for larger accounts.
When you work with HPM, you work with a seasoned professional, armed with the latest technology, who relentlessly pursues getting the details right. Portfolio management and trading decisions are rooted in scientific theory and real-world application, not speculation.
These parameters apply to both tracks, whether HPM is trading your models or its own.
Tolerance-Based Rebalancing
HPM manages portfolios to maintain a targeted asset allocation profile. Within the asset allocation, each investment vehicle receives a target weight. Rather than rebalancing on a rigid calendar frequency, such as quarterly or annually, HPM uses a systematic, drift-based rebalancing framework.
HPM sets explicit percentage-based tolerance bands around each asset class and investment vehicle's target weight. HPM’s core portfolio accounting software monitors portfolios continuously and flags trades only when an asset class drifts outside its established tolerance band. When a band is breached, HPM trades the account to rebalance the drifted asset classes back to their baseline target weights. This prevents arbitrary trading friction and minimizes unnecessary trading costs. HPM implements this approach flexibly, using the portfolios’ natural cash flows when possible.
Tax-Loss Harvesting Execution and Reporting
HPM executes tax-loss harvesting trades opportunistically, based on the parameters, thresholds, and boundaries you set: minimum dollar amounts or percentage losses per lot required to trigger a harvesting event. HPM’s core portfolio accounting software monitors accounts against these parameters.
When an eligible tax lot crosses your predetermined threshold, HPM executes the trade to capture the loss and routes the proceeds into a proxy investment vehicle to avoid wash-sale violations while maintaining market exposure. After executing these trades, HPM provides tax-loss harvesting summaries and execution logs documenting the actions taken.
Account Scaling
To ensure trading efficiency across varying account sizes, HPM adjusts portfolio architecture based on account scale. For accounts with lower asset levels, models may use fewer total fund tickers to prevent trade fractionalization errors, preserve cash buffers, and keep transaction friction low. For accounts with higher asset levels, models may incorporate a wider array of distinct fund tickers within the same asset classes, expanding tax-loss harvesting opportunities without altering core asset allocation targets.
Institutional Discipline
HPM believes strongly that discipline around a core investment philosophy produces better investment outcomes. I believe you can generate a meaningful rate of return without trying to outsmart global markets. By maintaining long-term target asset class weightings and adhering to systematic rebalancing parameters, HPM filters out short-term market noise, media speculation, and emotional macro forecasting.
How HPM Trades
These apply to the HPM Proprietary Models track.
Portfolio Design
HPM manages portfolios to maximize expected returns for given levels of expected risk by combining imperfectly correlated asset classes in a diversified manner. Where appropriate, HPM’s models use asset location strategies to maximize after-tax expected returns.
Investment Replacement Criteria
HPM maintains a long-term, low-turnover approach. A fund or ETF is only replaced if a competing vehicle demonstrates superior long-term viability to deliver the target asset class premium after net costs; if financial product developments improve the structural ability to deliver the asset class, such as an ETF version of an existing mutual fund strategy; or to reflect structural changes in the capitalization weightings of the global market itself.