CAPROCK Asset Classes:
The CAPROCK Group utilizes six asset classes to create diversified portfolios. Cash, as a strategic allocation, is occasionally described as a seventh. Each asset class offers unique portfolio construction characteristics, in the form of increased returns or reduced risk. The inclusion of some, or all, of these asset classes is dependent upon issues such as liquidity needs, time horizon, tax status and individual risk/return objectives.

Diversification benefits are derived from the lack of correlation among these six asset classes. This correlation variance is due to the divergent return drivers associated with each opportunity: the level and direction of corporate profits, the level & direction of interest rates and the inflationary environment, to name a few.

The CAPROCK Group seeks to maximize the diversification potential of each asset class by pursuing managers and opportunities which offer unique philosophies and processes. Equally important is a demonstrated focus on capital preservation. In addition, the tax efficiency of any manager or strategy plays an important role in the selection process.

It is important to note that direct experience is required to accurately assess opportunity in any asset class. Nowhere is this more critical than in private and alternative assets, in which the experience can mean the difference between making and losing money. Commonly, family offices offer experience in marketable equity and debt securities. Our ongoing intention is to gather partners and hire support staff whose experience spans the full spectrum of asset classes.

It is our belief that by utilizing a combination of asset classes exhibiting low correlation with multiple return drivers, along with diversification of manager style and philosophy, we can construct  portfolios that have the highest probabilities of meeting our client’s stated investment objectives.