Diversify Globally. We believe diversification among and within asset classes in order to manage risk is prudent. Successful investing means not only capturing risks that generate expected return but reducing risks that do not. Avoidable risks include holding too few securities, betting on countries or industries, following market predictions, and speculating on “information” from news shows, rating services, or internet investment tips. To all these, diversification is considered the antidote in that it washes away the random fortunes of individual stocks and positions in a portfolio to capture the returns of broad economic forces.
Deliver Performance. Traditional active managers strive to beat the market by taking advantage of pricing “mistakes” and by attempting to predict the future. Too often, this proves costly and futile. We help clients succeed at investing, not speculating. Our passive management style thoroughly rejects the notion that additional return can be earned by predicting, or timing the markets. Passive management reduces the chance of making a wrong prediction. Passive management relies upon the long term efficiency of the markets to provide the expected return of the portfolio. As such, we will not be an “active” portfolio manager, but will instead focus on designing and maintaining the optimal asset allocation consistent with the client’s objectives and risk tolerance.
Keep costs low. We attempt to minimize both direct and indirect portfolio costs and improve portfolio tax efficiency. Because passive management tends to require fewer securities transactions over time, clients’ commission expenses are lessened along with the likelihood that capital gains will be realized.
Pulling it all together through Functional Investing TM We created the concept of Functional Investing to help us meld the financial planning objectives of our clients with a portfolio appropriate for their goals.
Investments can serve one of three basic functions: Growth, Risk Reduction, or Inflation Protection – GRIP TM for short.
Growth assets are primarily stocks, both international and domestic which seek capital appreciation.
Risk reduction assets include cash, bonds, and hedged strategies. These are the primary means we use to adjust risk in clients’ portfolios.
Inflation Protection assets include commodities (agriculture, metals, precious metals, and energy), international and domestic real estate, and Treasury Inflation Protected Securities (TIPS). These assets aim to protect purchasing power over time.
Please contact us to learn more.