www.merceradvisors.com This video, the second in a two-part series, focuses on portfolio execution and the critical beyond-the-market elements involved in creating the potential for additional incremental return. Mercer Advisors' quantitative investing goes beyond market returns. It's critical in execution to maximize your after tax return. The first factor in Mercer Advisors' execution is rebalancing your account. The benefit of portfolio rebalancing is managing the portfolio's risk on the down side, while maximizing the return. In this example we have in 1999 a 10% allocation to emerging markets, over that year the return for emerging markets skyrocketed more than 74%, making that 10% allocation grow to 14%. After rebalancing, we carved off that 4%, bringing it back into the balance of the portfolio. The following year, in 2000, emerging markets gave up some of that stellar return. The 10% allocation contracted down to 7%. Rebalancing brought that allocation back up to 10%! . What's the net result over the two year period? The gain from rebalancing to keep this 10% allocation true to emerging markets, netted a 1.3% return. Better returns as a result of rebalancing. The second is tax-management. How do you squeeze the most out of the in-the-market returns to net the maximum after-tax return? Let's look at our quantitative funds and how they maximize after-tax returns. All investing has a tax cost. Our quantitative funds have proven to have very low tax cost drag. The
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