Once we determine an appropriate strategic asset allocation for your portfolio, we move on to select individual investment funds for each asset class. Our partnership with a nationally recognized institutional investment consultant provides us access to a universe of more than 10,000 non-proprietary investment products, including mutual funds, exchange-traded funds, interval funds, and private investments.
We incorporate both active and passive funds based on market efficiency. In more efficient markets (e.g., U.S. stocks) we prefer to use more passive strategies. In less efficient markets (e.g., emerging markets), we tend to use more active managers.
We allocate to both growth and value styles, though as value investors, we tend to overweight value strategies.
We prefer to hire managers that stay fully invested to minimize the opportunity cost of too much cash.
We consider a range of investment options and vehicles such as: mutual funds, exchange-traded funds, interval funds, and private fund structures, and select the vehicles that best meet each client’s needs.
We are sensitive to each strategy’s tracking error to minimize “blow-up” risk, where a single manager’s underperformance destroys all the excess return generated by other managers in the portfolio.
Key criteria for evaluating and selecting funds include total assets managed, holdings analysis, clearly articulated process, sufficient manager tenure, and historical performance that is consistent with the defined process.
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Frequently Asked Questions
Mutual funds and exchange-traded funds (ETFs) are both effective vehicles for investors to gain access to a wide array of asset classes and strategies in a diversified way. ETFs have historically been vehicles for passive strategies that are based on a defined index. They trade like stocks which can be bought and sold throughout the day and incur implicit trading costs. Mutual funds have historically been the vehicle of choice for active strategies, partially because their holdings don’t have to be reported in real time. Mutual fund orders are executed just once a day at the end of the day, generally at a fixed dollar commission. Both fund structures are mainstream with investors often choosing one investment option over the other based on their investment strategy.
An interval fund is a kind of mutual fund that is considered “closed-end” in that it has a fixed number of outstanding shares and limited redemption opportunities. Because of these limitations, an interval fund is less liquid than a traditional “open-end” mutual fund. Many alternative or private investment options that do not work in traditional open-end mutual fund or exchange-traded fund (ETF) format can be offered to individual investors through an interval fund.
Private investments are ownership interests in non-registered entities’ securities. The three most common types of private investments are (1) private equity (ownership interests in non-public companies), (2) private credit (typically loans to non-public companies), and (3) private real estate (ownership and rental operations of buildings).
Private investments can be a valuable part of a well-diversified portfolio, particularly for investors seeking long-term growth and comfortable with less liquidity. It offers access to opportunities not available in public markets and may enhance overall return potential when thoughtfully integrated into a broader investment strategy.
However, private investments typically come with longer time horizons, higher minimum investment requirements, and unique risks. It’s important to carefully consider how these factors align with your financial goals, liquidity needs, and overall risk tolerance. At Heritage Financial, we will help evaluate whether private investments fit within your overall wealth plan and investment objectives. Let’s Talk.
Market efficiency refers to how reflective current market prices are of all information available to investors. U.S. large cap stocks are thought to be very efficiently priced, with most, if not all, available information scoured over by many investors, all interested in maximizing their returns. Some say small cap and international stock markets are less efficient, with not all available information reflected in prices at any given time. Less efficient markets offer more investment options for managers to take advantage of securities that they believe to be over- or under-valued.
Tracking error refers to how close the performance of an investment strategy or security (e.g., mutual fund, exchange-traded fund (ETF)) mirrors the performance of a relevant benchmark index. Active managers who significantly over- or under-weight securities or sectors relative to a benchmark will often have higher tracking error than passive managers that strive to keep overall weightings in line with a benchmark. Higher tracking error can be beneficial in less efficient markets, where there are more investment options for managers to benefit from price inefficiencies.
What Our Clients Say
We feel very fortunate that we chose Heritage to be our financial managers. We know our savings are in good hands.
Kathy & Gary , Massachusetts
Over the years that I have been a client at Heritage, they have done a superb job of listening to my financial goals, and helping me achieve them. Thanks to them, and all things being equal, my retirement is and will be calm, financially sound, and will allow me to remain as independent as I wish. I value their insight, respect their continuing research, and appreciate that they continuously study to remain informed and current about the markets and the financial future we can all look forward to.
Sue , Massachusetts
Mary and I have long thought that one of the best things we have done is to use Heritage Financial to take care of our financial affairs. In that regard, we feel Heritage Financial is doing an excellent job and quite frankly, we sleep well at night without any money worries. But more than that, we have met very nice, friendly, professional people at Heritage. Mary and I value these relationships very highly. The service that you both provided me today is deeply appreciated and more “frosting on the cake”.
Heritage Clients , Massachusetts
Our experience with Heritage Financial services, has been nothing short of admirable. We have been with Heritage Financial for a long period of time, in which we’ve developed a strong and lasting relationship and friendship with many of the wealth advisors there. The advisors have been kind, honest, trusting and compassionate. Their advice has helped us make important financial decisions. We have recommended Heritage Financial to many of our friends, and family, and we will continue to recommend them.
Heritage Clients , Massachusetts
Peace of mind and a feeling of security is what all of us wish for as each year flies by during these uncertain times. I wish I had not waited until 2019 before enlisting the help of HFS, but better late than never!
The team at HFS is approachable, accessible, professional and they can explain even the most complex financial topics in laymen terms. The HFS team practices the perfect blend of the science as well as art of financial planning. I thank them for taking me and my family on as clients!
From a grateful client and her entire family , Massachusetts
This testimonial has been given by a current client of Heritage Financial Services. No compensation was provided for this testimonial.
Awards & Recognition
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