Investment Philosophy
Our investment philosophy and process is transparent, time-tested, and informed by leading academic research and portfolio theorists, including Nobel Prize winning economists. We leverage decades of research and keen insights from renowned fund families like Dimensional Fund Advisors (DFA), Vanguard, and others along with the objective expertise at LPL Financial Research to design and manage client portfolios. Our investment philosophy is rooted in the following time-tested principles:
- Efficient Market Hypothesis: We believe the security markets are inherently efficient, and, are therefore effective at pricing in all known and available information. This belief lends to a disciplined and scientific approach which historically has rewarded long-term investors with an incredible opportunity to build wealth. As a result, we do not time the market or make decisions on emotion. Instead, we leverage the capital markets and utilize several known factors supported by rigorous research as the main contributors of a portfolios expected risk and return profile.
- Risk & Return: We believe risk and return is directly related and that returns are the result of assuming risk. Therefore, increased levels of risk provide the potential for a higher expected rate of return. However, not all risk is worth taking and most returns are delivered from assets classes, security risk factors, and how an investor’s capital is allocated among them rather than from any one particular security or market timing strategy.
- Asset Allocation: The most important component to investment performance is portfolio structure, otherwise known as asset allocation. We design balanced and diversified portfolios that mitigate the risk and return trades offs by allocating capital to asset classes with additional consideration to the following risk factors within equity (stock funds) such as size, value, and profitability; and those factors within fixed income (bond funds) such as term and credit. Each client’s investment objective and risk tolerance is unique, so balancing an investor’s risk and return profile within the context of competing financial goals is the art of what we do.
- Global Diversification: Prudent investing is much more than “not putting all your eggs in one basket”. We design portfolios that can invest in over 12,000 securities throughout 40 different countries, not to mention across most company sectors, styles, and sizes; all in one account. Global diversification is effective and mitigates common pitfalls such as under performance attributable to investing in one or a few stocks, sectors, or missing various asset classes altogether. By strategically blending multiple assets classes with dissimilar return patterns, security risk and volatility is mitigated to a level appropriate for each investor.This philosophy and process provides the framework for more predictable and consistent returns over time while also building wealth more efficiently and creating a better overall client experience.
Select Pursuing a Better Investment Experience for a summary on the philosophy that drives our investment process and Key Investing Principles to improve your odds of success.
Visit our dedicated Asset Management Services page to learn more about our investment process and available investment strategies.
Contact us today to schedule a free portfolio review and to see how we can help you harness the power of the financial markets.