Investment Methodology

By skillfully identifying opportunity, capably monitoring progress and carefully balancing risk, Riggs Capital Management has created an investment strategy that affords you the opportunity for long-term capital appreciation.

Investment Selection Process

When selecting investments for your portfolio, RCM looks well beyond performance history and third-party ratings to qualify an investment (see simplified chart on the right). Our extensive and ongoing due diligence is the foundation of investment selection. While this process entails in-depth analysis of financial information, in many cases it also involves one-on-one consultations with mutual fund and separate account managers. These interviews allow RCM to obtain deeper analytical perspectives about manager discipline, commitment and philosophy. The investments that survive this rigorous selection process will be compared based on relative strength and market risk analysis.

Relative Strength Analysis

On a daily basis, RCM monitors each investment vehicle, asset class and money manager that survived our rigorous investment selection process. Using relative strength analysis, RCM measures the momentum and duration of asset trends and those assets demonstrating strength receive further consideration and analysis. RCM ranks these investments against highly rated alternatives (see chart). Because asset class performance varies over time, RCM’s objective is to allocate dollars into the investments currently showing the most compelling long-term relative strength.

This chart is a theoretical example of the velocity of moving averages of several asset classes. The higher an asset class is relative to others on the chart, the greater the relative strength. Relative strength is the rate at which an asset moves in relation to other assets. RCM monitors relative strength as a part of its investment allocation process.

Market Risk Analysis

Once investments have passed RCM’s comprehensive selection process and been ranked by relative strength, they are evaluated based on market risk. At times there may be too much risk associated with a particular asset class or sector of the market to maintain a position in that area. Our market risk analysis considers current market and economic conditions to determine when it is best to stay in an asset class and when it’s time to reallocate.

The chart to the right reflects how asset class performance can vary from year to year. Following the yellow line in the example below shows how the International Stock asset class outperformed in Year 1 and 7 but trailed most other asset classes the remaining six years. With this in mind, RCM diversifies client portfolios to take full advantage of areas that are performing well while limiting or avoiding areas that are performing poorly.

RCM applies the time-tested principles of Modern Portfolio Theory, asset allocation, diversification, relative strength and market risk analysis into our proprietary investment methodology. This allows RCM to design and manage your portfolio with the intent to achieve consistent risk-adjusted returns across all market cycles. Our asset allocation expertise enables us to optimize long-term performance, control volatility and identify new investment ideas in response to opportunities – and risks – we see on the horizon. As market conditions change, RCM will make appropriate adjustments to your portfolio.

Asset Class Performance Changes Over Time. RCM seeks to diversify your portfolio in order to take advantage of areas of the market that are performing well and avoid areas that are performing poorly. You may own several different asset classes at one time. The chart on the left is an example of how asset class performance can shift. In this example, if you follow the yellow line, you will see that the International Stock asset class performed better than the other asset classes in year one and under-performed in year eight with varying performance in between.