402 Gammon Place
Suite 380
Madison WI 53719

WISCO Investment Management, Logo
Call: (608) 509-7627
Fax: (608) 237-2206
Email: info@wiscoinvest.com

Our Investment Process

At WISCO Investment Management in Madison, Wisconsin, our goal is to provide clients with a liquid portfolio that targets a specific level of return while taking the least amount of risk possible to achieve that targeted rate of return. Our investment process has six steps, which we outline below.

Collect and Analyze Data

WISCO maintains a database with more than 20 years of performance history for a wide variety of assets. This data allows us to analyze not only how a particular asset has performed over time, but also to study the interaction between different asset classes. By analyzing these types of relationships we are able to build efficient portfolios that maximize the benefits of diversification.

Forecast Future Relationships

While studying historical relationships between assets is an important part of our investment process, this analysis is incomplete without also incorporating a view of what the prospects are for these asset classes in the future. In this part of the process, we assess the likelihood that an asset will perform better or worse than it has historically based on its current fundamentals and valuation.

Financial Chart and Calculator

Select Asset Classes

In selecting asset classes, we consider two primary criteria: can it improve the overall diversification of our portfolios and are we able to make a cost-effective, liquid investment in the asset class. The five asset classes we currently invest in are domestic equities, international equities, domestic fixed income, alternative investments, and money markets.

Security Selection

We look to invest in securities that are cost-effective and perform in line with an underlying index or asset type. For these reasons, we generally invest in exchange traded funds (ETFs) instead of mutual funds. On the cost side, we can build a portfolio with ETFs that costs just 0.10% to 0.15% per year compared the average actively managed Mutual Fund that costs more than 1.00% annually. We have found that ETF performance is highly correlated with the asset class or index whose return we are trying to replicate.

Create Optimized Model Portfolios

In this step, we marry our future forecasts and historical data in an optimization program. This program produces five different portfolios with the most aggressive portfolio generally as volatile as the domestic stock market and the most conservative portfolio about one third as volatile as the domestic stock market. All five of these portfolios are considered "efficient" in that each has the best possible expected return for a specified level of risk.

Monitor and Adjust

We rebalance our client portfolios every six months. However, we are monitoring the results and thinking about how we can improve the returns of these portfolios every day. We are continually assessing if our forecasts are too aggressive or too conservative and regularly asking ourselves how current developments are changing market fundamentals and asset valuations. We also closely monitor new investment opportunities with an eye towards improving the cost structure and overall performance of our ETF lineup.