Portfolio Construction Through a Behavioral Lens

How well are investor portfolios prepared for market crises? Philip (Felipe) Toews, CEO and portfolio manager of Toews Asset Management, shares with Real Vision managing editor Ed Harrison his unique investment approach that has been tested through good markets and bad over a quarter century. He elaborates on how both investment managers and investors need to be educated about behavioral shortcuts that cause some to sell and pull money out of the market at the wrong time or pile into risk at the top of the market. His strategy keeps investors fully invested through the investment cycle without having to worry about asset allocation changes. Filmed on April 19, 2021.

Key Learnings: Understanding the psychology of investors, Toews alters a standard 60-40 portfolio to hedge against even a once in a century drawdown on the equity side and historic inflation on the bond side. The Behavioral Portfolio is designed to withstand events like the Great Depression or inflation of the 1970s. The result is a unique approach that allows investors to capture the lion’s share of right tail market peaks while minimizing left tail market troughs.

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