Investment Diagnostics

Our state-of-the-art diagnostic analytical computer systems featuring
myriad customized solutions not only provide clients with confidence and security, but with benchmarks, measurements, and optimized portfolios.

Our affiliate, ECA Investment Group, Inc. diligently pursues detailed options and methods for investment optimization. We apply statistical, financial, and algorithmic innovations to enhance the investment value and security of client portfolios.

This process of asset allocation - currently known as modern portfolio theory, capital market theory, or mean-variance optimization - is the scientific combination of various (often uncorrelated) asset classes to maximize return and minimize risk.

Risk adjusted returns are enhanced by scientifically creating an asset
allocation of fixed income, large, mid and small cap stocks, international stocks, and hedge funds. The asset allocation process also involves rebalancing client portfolios among asset classes, dealing with alternative investments, and meeting cash-flow planning objectives.

The ultimate goal for our clients is to reach "mean-variance optimization" - where the expected return of the optimized portfolio is greater than other similar, non-optimized portfolios containing the same or higher risk levels. Reaching this optimization is known as "the efficient frontier," where returns are maximized for any given level of risk. The optimized asset allocation process quantifies the belief that diversification reduces risk.

In addition to portfolio optimization, Counsel provides cash flow and asset/liability analysis, including Monte Carlo simulations for defined benefit pension plans, endowments, and foundations. This sophisticated software runs thousands of probability simulations that incorporate plan assets and liabilities, institutional cash flows and other financial factors, analyzing all data and asset correlations to build a reasonable asset allocation plan, increasing the likelihood of obtaining superior asset growth and a known spending plan. These stochastic simulations narrow the outcome probabilities of otherwise completely random variables. We can then recommend an appropriate investment and style mix based on "knowns" rather than guesses.

These sophisticated quantitative analyses greatly enhance our clients' ability to meet the standards of ERISA and FASB and to reach the "efficient frontier". These services also build a strong "due diligence" file.