Our investment philosophy is grounded in nearly a century of rigorous academic research and relies on evidence rather than forecasts and predictions. Evidence-based portfolios are low cost, globally diversified, and aim to capture market rates of return in the most tax efficient manner possible. In addition, we use the evidence provided by Nobel Prize winning researchers to target areas of the global stock and bond markets which have provided higher returns to investors over the long term. We'd enjoy the opportunity to share with you how our philosophy has added significant value to our clients' portfolios over the long term.
The pillars of our approach to investing :
I. Client Centered
The building blocks of a portfolio should represent the characteristics of the investors financial profile. Qualities such as time horizon, risk tolerance, taxes, and return targets ultimately dictate the balance that should exists between stocks, bonds, and cash. This is done through Asset Allocation. A time tested model of investing, where assets are divided among the broad asset classes to reflect risk/return objectives. It has been academically researched, tested, and proven to accurately produce a majority of investment return and manage risk factors over time.
Balancing uncorrelated assets in an appropriate combination is one of the better ways to reduce the risks of market volatility. We institute multiply levels of diversifying our clients investments both globally and domestic, among equity and debt instruments, sectors, industry, classes and investment types. We leverage tactical weighting shifts to add to optimal performance and rebalancing to maintain order of the allocation and reduce overall risk.
III. Risk Priorities
Taking unnecessary risks through behaviors such as chasing return, speculative investing, and concentrating in similar assets, often result in loss of principal for most investors. We don't believe in taking unnecessary risk. We aim for consistent results in both up and down markets managing our portfolios at an optimal level of risk to achieve target returns. Mitigating areas of risk we can control through fundamental tools while prioritizing monitoring areas of overexposure to uncontrollable market risks, economic head winds, and surprise events.
IV. Mitigate Net Return Drag
In order to achieve our standards for optimal performance, we eliminate the drag on returns across multiple controllable channels of investing. One of those ways is by applying strict controls on costs that eat into our clients return. Replacing high expenses from actively managed mutual funds with index ETF's, keeping investment turnover low, and avoiding dislocation in trading executions are a few ways we search for and eliminate unnecessary costs.
The return that ultimately matters most to investors is the return they keep. That is why we deploy tax efficient measures to maximize our clients net return. Through using proper asset location across taxable and retirement accounts, selecting appropriate investment types, tax loss harvesting, and other smart tax mitigating processes we add meaningful percentage points to our client's take home earnings.
Investor behavior through natural emotions of fear or greed often gets in the way of making the best investment decisions. That is why our clients choose to delegate that responsible to us. With more than two decades of managing investments during an unprecedented period of extensive volatile cycles, we are your experienced choice for navigating the markets ahead. We have the knowledge, discipline, and prudent disposition to help you make smart investing decisions instead of emotional ones.
VI. Top Down Placement
Macro and micro economic climates determine the secular movements of longer term trends creating the conditions for certain capital market cycles. Those cycles determine the behaviors of different asset classes, sectors and industry both in the US and globally. Managing these class levels creates opportunities to enhance return and reduce risk. We view each level from the entire financial system down to individual securities to align our clients portfolio with conditions.
ESG stands for Environmental, Social, Governance and is a set of external factors that can be added to traditional financial research when applying the different levels of investment analysis. Beyond the personal preference to hold such investments, the inclusion of these factors add a valuable financial advantage. Strategically, this widens the scope of analysis often capturing additional risks and identifying opportunities that traditional analysis alone would miss. To learn more about how we use ESG see our SRI Investing Page.
VII. True Best-In-Class Selection
The final stage in building our portfolios through the top down methodology is selecting the best investment choice comparatively against their like-peers. We use various and different data driven systems to measure criteria applicable to those investment types. We then can filter by investment type, asset class, size and style, sectors, industry, and classes to narrows pools into investment equivalents. We then begin measuring comparable data across related investments in a particular class. This allows us to identify which investments stand out from their peers as best in their class and select the best choice for our portfolio.