Investing is not complicated, but it is hard. Very often the right thing to do is not what seems or feels right in the moment. With the wild swings that can take place in the economy, markets and world events you need a foundation to underly your decisions so they're not all taking place in a vacuum. These "Four Pillars" make up that core foundation of our investment beliefs, they are based on decades of Nobel Prize-winning, acedemic research combined with our over 20 years of practical, real-world experience working with clients.
1. Market Reward Discipline:
Constantly changing investment portfolios to try and react to events is a sure path to failure. Not only do you incur trading and tax costs, typically by the time you react whatever opportunity seemed to be present has already passed.
2. Traditional Approaches Often Fail to Meet Expectation:
Most professional money managers fail to beat their benchmarks. A study by the Center for Research in Security Prices at the University of Chicago shows that only about 20% of mutual funds beat their benchmarks over a ten year period, and of that group only one third will go on to continue beating their benchmarks over the next five years. Finding a manager that "beats" the market is more a factor of luck than skill. We reject this whole premise and build on the portfolio level down not the investment level up.
3. Research Suggests a Premium Offered By Certain Rsik Factors:
Pioneering research by Nobel Prize winner Eugene Farma and his frequent partner, Kenneth French has shown that tilting your investments toward smaller companies and value companies provides long-term outperformance not just in the U.S. but in International Developed and Emerging Markets as well.
4. Fees Matter:
While we deserve to get paid like any other service provider, there are actions taken by many investment managers that increase fees but provide no value. For example, frequent trading costs extra money, yet research shows that investments with the highest "turnover" in their portfolios and the corrosponding higher costs to cover those trades actually underperform their less active peers. Everything costs money, but those costs should come with benefits.
These four pillars ground our investment decisions whether we are using traditional portfolios, or our ESG investments.