Investment Philosophy

Our Investment Philosophy

Markets are efficient.

Most relevant information is likely already reflected in the price of a security. Attempting to “outperform” the market is unlikely to succeed and expensive to attempt.

Costs matter.

Keeping expenses to a minimum by owning low-cost funds and minimizing taxes will have a tremendous impact on your long-term returns.

Diversification matters.

Spreading out your investments across asset classes, countries, industries, and companies reduces the risk of permanent losses, and can provide a more stable investment experience over time.

Your financial and life goals should drive the investment process for you and your family.

Our objective is not to beat a specific market index. It is to meet or exceed your specific needed rate of return over time. 


 

We play a vital role in helping you tune out the media noise and focus on actions that can improve your investment outcome.


 

How We Build Your Portfolio

Determine Your Needed Rate of Return

This is the rate of return that needs to be earned over time so that an acceptable probability of reaching your goals is achieved. 

Our focus is on meeting or exceeding your specific needed rate of return rather than trying to outperform arbitrary benchmarks or market indexes that have no connection to your long-term goals or objectives.

 

Set the Strategic Allocation

This is the long-term mix of stocks, bonds, and other assets that provide the best opportunity for achieving your needed rate of return over time with the least amount of investment risk possible.   

This is a critical step in the construction process as studies have shown that the asset allocation decision is responsible for about 90% of a portfolio’s total risk.

 

Select Individual Investments

Once the strategic allocation is set, we select individual investments we believe efficiently deliver the desired asset class exposures. 

Our view is that true investments are not inherently good or bad.  Rather, investments simply possess characteristics.  We judge the appropriateness of an investment based on whether its characteristics help achieve a desired outcome in a client’s portfolio.

 

Determine Asset Location

Taxes can have a material impact on investment returns and wealth accumulation over time.

We help clients maximize their after-tax return by optimally placing certain asset classes in particular types of accounts.  After all, it’s not what you make that matters, it’s what you get to put in your pocket.

 

Ongoing Monitoring and Rebalancing

Periodic reviews alert us to potential changes in a client’s financial situation. 

Our view is that changes in the strategic allocation of a portfolio should be driven primarily by changes in a client’s personal situation, not in response to short-term market fluctuations.

Dynamic capital markets ensure that individual position weights will stray from their initial target allocation over time. 

Rebalancing brings your portfolio back into alignment with your target asset allocation preserving the risk/return profile of your portfolio.

 

*Diversification does not assure a profit or protect against loss in declining markets, and diversification cannot guarantee that any objective or goal will be achieved.