Methods of Analysis
The main sources of information include financial newspapers and magazines, research materials and services prepared by others, corporate rating services, annual reports, prospectuses, filings with the Securities and Exchange Commission, and company press releases. Security analysis methods include fundamental analysis.
Investment Strategies
RS Crum Inc. manages client accounts on an individual basis utilizing an allocation model that invests in a broad spectrum of investment categories. These categories may include cash, bonds, equities (stocks), ETFs, mutual funds, and alternative investments. Portfolios are globally diversified to manage the risk associated with traditional markets. RS Crum Inc. seeks to select securities with characteristics that are consistent with the investment objectives of each investment category. Since client portfolios are managed individually, portfolios with a similar investment objective and asset allocation may differ.
Timing, account size and tax factors may also influence our investment decisions.
Our asset allocation models and recommendations include mutual fund only allocations. The mutual funds recommended may include mutual funds offered by Dimensional Fund Advisors (“DFA”). Our recommendations are not limited to DFA funds. DFA offers professionally managed mutual funds at relatively low expense ratios and are not available directly to individual investors but are limited to a select group of independent financial advisors approved by DFA. We are unaffiliated with DFA.
RS Crum Inc.’s advisory representatives work with clients to determine their investment objectives, time horizon, income needs as well as their ability to take risk, need to take risk, tax considerations, and any special considerations and/or restrictions in order to develop the asset allocation and portfolio construction utilized for the client.
We are responsible for the supervision and management of securities we recommend. For information on the treatment of Non-Managed Accounts and / or Securities, please see above Item 4 Advisory Business.
Investing Involves Risk
Investing in securities involves risk of loss that clients should be prepared to bear.
General Risks of Owning Securities
The prices of securities held in client accounts and the income they generate may decline in response to certain events taking place around the world. These include events directly involving the issuers of
securities held as underlying assets of mutual funds in a client’s account, conditions affecting the general economy, and overall market changes. Other contributing factors include local, regional, or global political, social, or economic instability and governmental or governmental agency responses to economic conditions. Finally, currency, interest rate, and commodity price fluctuations may also affect security prices and income.
Specific Security Risks
Mutual Funds (Open-end Investment Company)
A mutual fund is a company that pools money from many investors and invests the money in stocks, bonds, short-term money-market instruments, other securities or assets, or some combination of these investments. The portfolio of the fund consists of the combined holdings it owns. Each share represents
an investor’s proportionate ownership of the fund’s holdings and the income those holdings generate. The price that investors pay for mutual fund shares is the fund’s per share net asset value (NAV) plus any shareholder fees that the fund imposes at the time of purchase.
Exchange-Traded Funds (ETFs)
An ETF is a type of Investment Company (usually, an open-end fund or unit investment trust) containing a basket of stocks. Typically, the objective of an ETF is to achieve returns similar to a particular market index, including sector indexes. An ETF is similar to an index fund in that it will primarily invest in securities of companies that are included in a selected market. Unlike traditional mutual funds, which can only be redeemed at the end of a trading day, ETFs trade throughout the day on an exchange. Like stock mutual funds, the prices of the underlying securities and the overall market may affect ETF prices.
Similarly, factors affecting a particular industry segment may affect ETF prices that track that particular sector.
Equity Securities
Equity securities represent an ownership position in a company. Equity securities typically consist of common stocks. The prices of stocks and the income they generate (such as dividends) may fluctuate based on events specific to the company that issued the shares, conditions affecting the general economy and overall market changes, changes or weakness in the business sector the company does business in, and other factors. Further, prices of these securities can be affected by financial contracts held by the
issuer or third parties (such as derivatives) relating to the security or other assets or indices.
Debt Securities (Bonds)
Issuers use debt securities to borrow money. Generally, issuers pay investors periodic interest and repay the amount borrowed either periodically during the life of the security and/or at maturity. Alternatively, investors can purchase other debt securities, such as zero-coupon bonds, which do not pay current interest, but rather are priced at a discount from their face values and their values accrete over time to face value at maturity. The market prices of debt securities fluctuate depending on such factors as interest rates, credit quality, and maturity. In general, market prices of debt securities decline when interest rates rise and increase when interest rates fall. The longer the time to a bond’s maturity, the greater its interest rate risk.
Cash and Cash Equivalents
The account may hold cash or invest in cash equivalents. Cash and cash equivalents are the most liquid of investments. Cash and cash equivalents are considered very low-risk investments meaning, there is little risk of losing the principal investment. Typically, low risk also means low return and the interest an investor can earn on this type of investment is low relative to other types of investing vehicles.
Other Business Risks
Cybersecurity Risk
Investment advisers and their service providers may be prone to operational and information security risks resulting from cyber-attacks. Cyber-attacks include, among other behaviors, stealing or corrupting data maintained online or digitally (including, for example, through cyber- attacks known as “phishing” and
“spear-phishing”), denial-of-service attacks on websites, the unauthorized release of confidential information and causing operational disruption. Cyber-attacks may interfere with the processing of transactions, cause the release of private information or confidential information of RS Crum Inc., cause reputational damage, and subject RS. Crum Inc. to regulatory fines, penalties or financial losses, reimbursement or other compensation costs, and/or additional compliance costs. While RS Crum Inc. has established business continuity plans and systems designed to prevent such cyber-attacks, there are limitations in such plans including the possibility that certain risks have not been identified or mitigated
Coronavirus or Pandemic Risk
The global outbreak of the 2019 novel coronavirus (“COVID-19”), together with resulting voluntary and
U.S. federal and state and non-U.S. governmental actions, including, without limitation, mandatory business closures, public gathering limitations, restrictions on travel and quarantines, has meaningfully disrupted the global economy and markets. Although the long-term economic fallout of COVID-19 is
difficult to predict, it has and is expected to continue to have ongoing material adverse effects across many, if not all, aspects of the regional, national and global economy. A pandemic such as COVID-19 may impact the ability of RS. Crum Inc. to operate effectively, including the ability of its personnel or its service providers and other contractors to function, communicate and travel to the extent necessary. The spread of any contagious and debilitating health condition among RS Crum Inc.’s personnel and its service providers may also affect RS Crum Inc.’s ability to properly perform our duties.