Interview, contract and account set-up
Asset allocation
Security selection
Execution
Performance evaluation
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Interview, contract and account set-up
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This first interview allows prospective clients to determine whether or not
they feel comfortable with our management style. If the Client decides to engage our
services, he or she signs a contract that details our mutual responsibilities. At the
same time, the Client has to establish an account with a custodian. Universe, Inc. does
not act as a broker or as a custodian of assets, but utilizes the services of reputable
brokerage firms and banks for those services. We work with the client's existing brokerage
account and are authorized by the client to make investments on their behalf. If a client
does not have a brokerage account at this time we help to open one. Our first meeting
allows us to understand the Client, and his or her needs and preferences.
The following are the factors that we take into consideration in managing each
portfolio:
risk tolerance of investor
size of financial assets to be invested
understanding the cash needs of the investor
time horizon of investments
age
extent of other financial assets as well as non-financial holdings
level of income
stability of income
tax status of the investor and tax implications of investments
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Asset allocation
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The second step in our investment process is Asset Allocation. Based on
investor's characteristics we determine the right mix for the portfolio among asset
classes (stocks, bonds, real assets) as well as among countries (US and foreign). In
determining the mix, we draw on the lessons of diversification; asset classes tend to
be influenced differently by macroeconomic events. This, it turn, implies that diversifying
across asset classes will yield better tradeoffs between risk and return than investing in
any one risk class. The same can be said about expanding portfolios to include both domestic
and foreign assets.
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Security selection
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The third step in our investment process is Security Selection. We mostly adhere
to passive security selection - the indexing strategy. There are two reasons we would use
active security selection: 1) at the specific request of the client; 2) when we see great
potential in a particular company. In this case we would make our investment choice based
on fundamental analysis as well as comparable analysis.
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Execution
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Our execution style of the investment process is based on minimizing trading as
well as its cost. We try to make trading costs as low as possible and execute our trades
through brokers who are the most cost efficient.
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Performance evaluation
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The last, but not the least important, step in our investment process is performance
evaluation. Our evaluation is based on comparison of results from of our clients with
comparable benchmarks based on after tax return and risk.
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