At Shelburne Fiduciary Partners, our goal is to identify, monitor, and manage the risks in our clients' portfolios. Calibrating and understanding the drivers of potential downside risk is a critical element of this process. Diversification and liquidity are also significant factors in controlling risk.
We utilize our fixed-income allocation to dampen volatility and provide an element of stability in down equity markets. Therefore, we generally emphasize fixed-income risk that is negatively correlated with the stock market and avoid the most credit-sensitive areas.
We believe having a long-term focus and well-defined risk parameters can help prevent behavioral errors, including excessive market timing.