How to Build a Best-in-Class Portfolio

Why You Need a Strategic Portfolio Approach

A thoughtfully constructed portfolio is essential for anyone serious about building and maintaining wealth across generations. As we continue our series here—and on the AWM Insights podcast—about best-in-class portfolios, in this post, we'll break down why cookie-cutter investment solutions fall short for high-achieving individuals and explain the critical components of a best-in-class portfolio.

You'll gain insights into how intentional asset allocation, proper risk management, and human-centered investment strategies work together to create lasting wealth—regardless of market conditions.

What Is a Best-in-Class Portfolio?

A best-in-class portfolio is a strategic, personalized financial architecture designed specifically for your unique situation and goals. Unlike standardized approaches that merely consider age and basic risk tolerance, a truly elite portfolio starts with your life plan and builds investment strategies around your specific priorities. It combines offensive growth potential, defensive stability, and specialized alternative investments in a balanced framework that can adapt to changing conditions while keeping your long-term objectives at its center.

The Foundation: Strategic Asset Allocation

The cornerstone of any superior portfolio is a thoughtful asset allocation strategy. Think of asset allocation as assembling your financial team—selecting the right players and positioning them optimally for success.

Just as a sports team needs balance between offense, defense, and special teams, your portfolio requires a strategic distribution across different asset classes:

1. Offensive positions (stocks): Both public and private equities serve as your growth engines. Public stocks might be your agile, quick-gain players, while private equity investments represent your potential for bigger, longer-term plays.

2. Defensive positions (bonds): Fixed-income investments provide stability when volatility strikes. Just as defense keeps you competitive during offensive slumps, bonds help maintain portfolio integrity during market downturns.

3. Special teams (alternatives): Real estate and other alternative investments offer potential returns uncorrelated to traditional markets. They round out your portfolio with specialized capabilities that traditional investments can't provide.

What distinguishes a truly effective asset allocation from a mediocre one is customization. Generic formulas based solely on age or simple risk questionnaires can't account for your unique circumstances, goals, or timeline. A best-in-class approach evaluates your complete financial picture, career trajectory, and personal aspirations before determining the optimal allocation mix.

Building in Staying Power Through Risk Management

Risk management is the portfolio equivalent of injury prevention in sports—it keeps you in the game when conditions get tough. Without proper risk controls, even the most aggressive growth strategy can be derailed by a single market correction or economic downturn.

Effective risk management employs several key strategies:

1. Diversification: This fundamental principle spreads risk across different asset classes, sectors, and geographies. When one area underperforms, others can compensate, preventing catastrophic portfolio damage. Just as a team needs depth at every position, your portfolio needs exposure to various investment types that can perform in different economic environments.

2. Rebalancing: Markets naturally shift over time, causing your allocation to drift from its intended targets. Regular rebalancing—selling outperforming assets and buying underperforming ones—maintains your risk profile and enforces the discipline of buying low and selling high.

3. Adaptability: Market conditions change, and your portfolio must be able to adapt. This "mid-game adjustment" capability is crucial for navigating economic shifts, policy changes, and market rotations. A static portfolio that can't adjust to new realities will eventually falter.

The conventional approach to risk management often relies on historical averages and probabilities—akin to studying water patterns to decide where to camp near a lake in ten years. A superior approach, however, builds adaptability directly into the portfolio structure. Rather than trying to predict the future with statistical models, it creates a "houseboat" that can rise and fall with changing conditions while always supporting your specific needs.

The Human-Centered Difference

What truly distinguishes a best-in-class portfolio is its human-centered design. This approach inverts the traditional investment process:

Traditional approach: Apply standardized investment solutions based on simple metrics like age or risk tolerance.

Human-centered approach: Start with your life plan, values, and goals, then build investment strategies specifically designed to support them.

This distinction is crucial. When your portfolio aligns with your actual priorities rather than arbitrary benchmarks, it creates both financial and psychological advantages:

• Greater resilience during market volatility because investments connect to specific purposes

• More rational decision-making during emotional market cycles

• Higher probability of achieving meaningful outcomes rather than just numerical returns

• Deeper confidence in your financial strategy

This alignment between life and investments allows you to focus your energy where it matters most—whether that's your career, family, or personal passions—rather than worrying about financial markets.

The Ultimate Competitive Advantage: Peace of Mind

A best-in-class portfolio delivers something far more valuable than just investment returns—it provides peace of mind. When you have confidence in your financial playbook, you can execute in other areas of life without distraction or anxiety.

This is the ultimate purpose of sophisticated portfolio construction: creating a financial foundation so solid and well-aligned with your goals that you can pursue what truly matters to you. Like an athlete who practices until key moves become muscle memory, a properly structured portfolio gives you the freedom to perform at your best in other domains.

By implementing intentional asset allocation, robust risk management, and human-centered design principles, you create more than just investment returns—you build a foundation for generational wealth that can weather market cycles while supporting your most important priorities. In a world of financial uncertainty, this strategic approach gives you the confidence to own your wealth, make an impact, and always perform at your best.