Overview of the UPAL WealthBuilder Program
The UPAL WealthBuilder Program is designed as an efficient investment management solution that offers asset allocation and manager selection to our clients. An independent Asset Allocation Committee from Bank of Oklahoma oversees the asset allocation process that is utilized in the WealthBuilder Program. The process establishes both long-term (strategic) and short-to-intermediate-term (tactical) asset allocation targets. The long-term asset allocation targets are developed by combining historical risk, return, and correlation data with state-of-the-art optimization techniques. The Asset Allocation Committee meets quarterly and as needed to discuss the Committee members’ views and expectations for the economy, review capital market assumptions, and assess the risk and opportunities in the marketplace over the short-to-intermediate time periods in order to formulate the tactical asset allocation changes.

Upcoming Strategy Changes
Please be advised that we will begin certain implementing changes to the WealthBuilder strategies the week of March 24, 2014. These changes and the rationale behind these changes are summarized below. Keep in mind that the changes will be implemented on the model level. Actual trades might vary in each account, depending on the account size and cash flows. We hope this information is helpful in facilitating communication with clients utilizing the WealthBuilder Program.

Tactical Allocation Changes
The Asset Allocation Committee recommended a further reduction from investment-grade bonds in favor of high yield, global bond, and low correlation strategies. These changes do not affect the overall fixed income and equity breakdown as equities continue to be over weighted in the portfolios. However, the shifts reflect the Committee’s guidance to diversify fixed income exposure, given that traditional investment-grade bonds will likely face continued pressure as interest rates trend up. In addition, the Committee recommended several changes within the equity space based on the outlook for the global economy and U.S. economic cycles. As a result, the following changes will be made across the different investment objectives, if applicable.

  • Changes to fixed income
    • Increase allocation to high yield bonds and developed international bonds
    • Increase allocation to low correlation strategies
    • Decrease allocation to short-term and intermediate-term bonds
  • Changes to equities
    • Overweight growth and underweight value within the U.S. large cap equity space
    • Increase allocation to developed international and decrease allocation to emerging markets
    • Increase allocation to long-short equity and infrastructure; decrease allocation to high volatility diversified alternatives