INVESTMENT PHILOSOPHY

We use a strategy of Asset Class Investing that requires a disciplined, consistent, long-term approach. This strategy is based on Modern Portfolio Theory (MPT) and the Efficient Market Theory (EMT). We invest across a variety of asset classes, each having its own unique risk characteristics. Portfolios are designed to provide returns consistent with a client’s goals, while reducing risk by widely diversifying the investments. We do not rely on stock picking or on trying to time the markets. 

Eugene Fama, Ken French, and other notable experts have statistically proven that asset class selection is the most important determination of portfolio performance. Fama and French have also shown that three risk factors - market, size, and price dimensions – explain roughly 94% of historical equity performance. 

Overall, asset class investing is based on the following:

• Broad diversification across multiple asset classes is critical in producing a portfolio that is less susceptible to downturns in the general markets.
• Over time, riskier asset classes provide higher expected returns
• Adding some high-risk, low-correlated asset classes to a portfolio can actually reduce volatility and increase expected returns
• Asset class portfolios can be designed with the expectation of delivering, over time, the highest returns for a given level of risk

When designing a portfolio for a client, we include alternative investment asset classes, where practicable, to further diversify our clients’ portfolios and reduce risk. The six major asset classes we use in portfolios are listed below:

• Domestic Equities
• International Equities
• Fixed Income Securities
• Real Assets (for example, timber, natural gas, industrial materials, etc)
• Private Equity
• Absolute Return (Market Neutral) Strategies

Portfolios are further diversified within each of these asset classes. Where possible we use low-expense options to reduce costs and boost performance of our clients’ investment portfolios.