Core Principles of our Investment Philosophy
The cornerstone of our investment philosophy is that capital markets work. Our commitment to this well-substantiated fact dictates all we do. In well-functioning markets, the buyer has the same information as the seller, new information comes randomly and prices quickly reflect this new information. Therefore:
- No identifiable trends or biases in price patterns appear
- Returns come only from bearing risks that can’t be diversified away
- Costs matter
Applying our investment philosophy to investment management means:
- Realizing market returns at minimum cost will result in superior performance
- Most performance is explained by a strategic asset allocation
- Results must be periodically measured against established goals in a straightforward and understandable way
We work to ensure a client’s portfolio bears only those risks for which it is expected that the market will provide a commensurate return.
Our approach includes:
- Establishing the risk profile that is consistent with the achievement of our client’s goals
- Identifying investment alternatives to achieve efficient diversification within particular asset classes
- Examining past returns and return variability and correlations to integrate investment objectives with what can be expected from capital markets
- Building a portfolio that provides a return commensurate with the risk profile through complete diversification and relentless focus on cost
- Developing and implementing systems to periodically measure and monitor results
- Reevaluating and rebalancing the portfolio
The underlying principle that capital markets work is the cornerstone of our approach. We develop a strong working relationship with our clients to ensure that they:
- Understand that risk and return are connected
- Develop reasonable expectations for portfolio performance
- Appreciate that achieving market returns produces superior results over the long run
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