Investment Philosophy

We offer a disciplined, unemotional, and highly diversified investment approach based on the science of investing that cuts through the noise and confusion of Wall Street by focusing on what really drives investment return, reduces volatility, and simplifies the investment process. The approach we use is known as asset class investing.

Our expertise lies in structuring portfolios that balance the objectives, constraints, and risk tolerance of each client. We bring over two decades of professional experience in portfolio construction and risk analysis to bear on our decisions. We draw upon rigorous thinking and research by leading academic economists.

The cornerstone of modern economics is that a free and competitive market is the most efficient way to allocate resources. Security markets throughout the world have a history of rewarding investors for the capital they supply. Companies compete for investment capital, and millions of investors compete with each other to find the most attractive returns. This competition quickly
drives prices to fair value, ensuring that no investor can expect greater returns without taking greater risk.

We believe that investment returns are determined principally by risk, and that a diversified portfolio’s expected return is a result of its exposure to specific market-based risk factors. Since a portfolio’s asset allocation determines its risk factor exposure, asset allocation is the critical decision an investor can make. We spend considerable time with our clients helping them understand the asset allocation policies and risk factor exposure of our recommendations prior to their approval.

Successful investing means not only capturing the risks that generate expected return but also reducing risks that do not. Avoidable risks include holding too few securities, betting on individual companies, countries, industries, or sectors, following market predictions, and speculating on buy or sell recommendations from securities analysts. Broad diversification is the antidote to these potentially damaging avoidable risks. Diversification helps to minimize the random outcomes of individual stocks, and positions an investment portfolio to capture the returns of broad economic forces.

A portfolio’s asset allocation can change or “drift” over time due to market fluctuations thereby changing its risk and return characteristics. The systematic process of returning a portfolio to its original allocation and restoring the desired risk profile is known as “rebalancing”. The importance of rebalancing, to the portfolio’s return and risk, as well as to the investor’s ability to achieve their desired goals cannot be overstated. The ideal frequency of rebalancing varies by client due to unique time horizons and tax situations.

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