How We Allocate and Design Client Portfolios

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At Di Bello Financial, we believe portfolios should reflect each investor’s objectives, risk tolerance, time horizon, liquidity needs, tax circumstances, and other relevant considerations. Diversification may reduce the impact of some individual risks, but it cannot eliminate losses or guarantee a profit.

Our portfolios may combine individual stocks, individual bonds, and carefully selected exchange-traded funds (ETFs). The mix varies by client and account. Individual securities may provide greater control over security selection, diversification, portfolio risk, cash flows, realized gains and losses, and certain tax-related implementation decisions. That flexibility requires ongoing research and may involve concentration, trading, liquidity, and security-specific risks. 

Individual securities do not guarantee better performance, lower risk, or greater tax efficiency than funds or other investment vehicles.

Every Client Portfolio Is Individually Allocated

Firm-wide allocations describe how assets are positioned collectively; they are not model portfolios or recommendations for individual investors.

Each client’s portfolio may differ based on risk tolerance, objectives, time horizon, income and liquidity needs, tax circumstances, financial resources, and other considerations. Different accounts within the same household may also be invested differently because of their purpose, tax treatment, expected withdrawals, or planning role.

A longer-term investor with greater tolerance for volatility may hold more equities, while a client approaching retirement or anticipating significant distributions may require a different combination of equities, fixed income, and short-term investments. No allocation eliminates market risk or guarantees that future cash-flow needs will be met.

Current Firm-Wide Investment Allocation

Across the firm, assets currently reflect an approximately moderately growth-oriented posture:

• 63% traditional equities
• 31% fixed income
• 5% real assets and diversifying investments
• 1% or less in cash and other short-term holdings

These percentages are approximate aggregate exposures at a particular point in time. They are not target allocations, model portfolios, or recommendations. 

They may change as markets move, client circumstances change, and portfolios are rebalanced.

Use of Individual Stocks and ETFs

Approximately 90% of traditional equity exposure is currently invested in individual stocks, with approximately 10% invested through equity ETFs.

We generally evaluate individual companies based on financial strength, earnings prospects, competitive position, valuation, industry conditions, long-term growth opportunities, and portfolio fit. These judgments may be incorrect, and individual stocks may underperform the broader market or experience significant losses.

Individual stocks may also provide flexibility for certain tax-management decisions, including evaluating realized gains and losses, coordinating transactions with available capital losses, and considering taxable consequences when rebalancing. These strategies are not always available, advantageous, or appropriate, and tax considerations do not eliminate investment risk.

ETFs may be used when broader diversification, market access, liquidity, cost, or the fund structure appears advantageous, including for international markets, smaller companies, certain industries, investment themes, or areas where broad exposure is preferable to selecting a limited number of securities. ETFs involve market, tracking, liquidity, and expense risks.

Research and Emerging Opportunities

Our investment process is forward-looking and extends beyond companies already held. We research new technologies, scientific developments, emerging industries, changing business models, and structural economic changes across sectors, including healthcare, biotechnology, industrials, manufacturing, aerospace, defense, energy, utilities, financial services, consumer industries, communications, and natural resources.

Areas such as artificial intelligence, semiconductors, cybersecurity, cloud computing, advanced biotechnology, robotics, autonomous systems, quantum computing, space technologies, advanced materials, and energy infrastructure may create opportunities or disrupt existing holdings. However, innovation may be difficult to value, capital intensive, highly volatile, subject to regulation and competition, or unsuccessful commercially.

We seek to evaluate whether a development may create durable economic value, sustainable competitive advantages, expanding markets, and a reasonable potential return relative to its valuation and uncertainty. Research may identify opportunities and risks, but it cannot predict which technologies or companies will succeed or prevent losses. Active management may involve higher costs, turnover, tax consequences, and the risk of underperforming passive strategies or relevant benchmarks.

Tax-Aware Portfolio Construction

Tax considerations may be incorporated into portfolio construction and implementation from the beginning. Depending on the client’s circumstances, we may consider asset location among taxable, traditional retirement, Roth, trust, and other accounts; after-tax comparisons among Treasury, corporate, and municipal securities; tax-loss harvesting; gain management; and tax-aware rebalancing.

Municipal securities may be considered when their after-tax yields appear attractive relative to taxable alternatives. They remain subject to credit, interest-rate, call, liquidity, and state- or local-tax risks, and their tax treatment depends on the security and investor.

Tax strategies involve tradeoffs and should be evaluated alongside investment risk, costs, liquidity, and expected return. Actual after-tax results depend on individual circumstances, applicable law, transaction timing, investment performance, and other factors. Clients should consult their tax professionals.

Fixed-Income Allocation

Approximately 62% of the firm’s fixed-income allocation is currently invested in individual bonds, while approximately 38% is invested through bond ETFs.

Individual fixed-income securities may include U.S. Treasury securities, investment-grade corporate bonds, and municipal bonds. We may evaluate issuer quality, maturity, yield, call provisions, liquidity, and other characteristics. Individual bonds may support cash-flow planning or bond ladders, but ladders do not guarantee income, preserve principal, or eliminate reinvestment, interest-rate, credit, or liquidity risk.

Bond ETFs may provide short-duration exposure, liquidity management, broader credit diversification, municipal exposure, or other structural advantages. They remain subject to market, interest-rate, credit, liquidity, tracking, and expense risks and may trade above or below net asset value.

Managing Portfolio Changes

Appreciating investments may become larger portions of a portfolio, increasing exposure to a company, sector, or theme. We do not automatically sell a holding because its price has increased, but we continually review position size, valuation, fundamentals, correlations, sector exposure, liquidity, competitive threats, and alternative opportunities.

In taxable accounts, the tax consequences of a change may also be considered. A position may warrant reduction despite having a substantial unrealized gain, or it may be reduced gradually or coordinated with losses elsewhere. These approaches may help manage implementation tradeoffs but do not guarantee tax savings, improved performance, or avoidance of losses.

The Di Bello Financial Investment Philosophy

We believe diversification involves more than owning many securities. It may include investments with different earnings drivers, valuations, economic exposures, and risks, including established companies, selected emerging-growth opportunities, domestic and international investments, equities, bonds, and real assets. Related investments may still share common economic, regulatory, technological, or market risks.

Individual securities are central to our approach, while ETFs supplement the process where appropriate. At present, approximately 90% of traditional equity exposure is represented by individual stocks and approximately 62% of fixed-income exposure is represented by individual bonds. These percentages may change over time and may differ by client.

Our objective is to manage portfolios with consideration of risk, return, taxes, diversification, technological change, and each client’s broader financial circumstances. There is no assurance that this process will achieve a client’s objectives or outperform any benchmark or alternative strategy.

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About the Author

Annette Di Bello, CPA/PFS, CFP® is the Founder and President of Di Bello Financial, a fee-only Registered Investment Advisor headquartered in Mission Viejo, California.

With nearly four decades of progressive experience in accounting, taxation, financial planning, and investment management, Annette helps high-net-worth individuals and families, business owners, executives, physicians, and retirees coordinate investment decisions with tax strategy and long-term financial planning.

As a Certified Public Accountant (CPA) with the Personal Financial Specialist (PFS) credential and a CERTIFIED FINANCIAL PLANNER® professional, Annette brings an integrated perspective to portfolio management, retirement planning, tax strategy, estate planning coordination, and wealth preservation.

Di Bello Financial serves clients throughout Orange County, Los Angeles County, San Diego County, and other states where permitted by law.

Important Disclosure: The investment allocations and portfolio characteristics discussed above represent approximate aggregate firm-wide exposures as of August 28, 2026 and are provided solely to illustrate Di Bello Financial’s general investment approach. They do not represent an individual client portfolio, model portfolio, composite, target allocation, performance presentation, or recommendation to buy or sell any security. Individual client portfolios may differ materially based upon each client’s investment objectives, risk tolerance, time horizon, liquidity needs, tax circumstances, account type, and other relevant considerations. Portfolio allocations, securities, and investment strategies are subject to change without notice. Tax strategies and their effectiveness depend upon individual circumstances and applicable tax law; Di Bello Financial does not guarantee any particular tax result. References to investment themes, emerging technologies, or industries are illustrative of areas the firm may research and do not constitute recommendations or assurances that such investments will be profitable. Investing involves risk, including the possible loss of principal.