Our Investment Philosophy
Historical investment performance studies indicate that asset class allocation determines the vast majority of portfolio performance. Given this, we strongly believe that Modern Portfolio Theory (MPT) and passive class asset investing is the best way for us to develop prudent, long-term portfolios for our clients.
The formation of MPT comes as a result of on-going research conducted by the world’s leading financial economists, three of whom received a Nobel prize for their contributions.
Major tenets of Modern Portfolio Theory include:
- Markets process information so rapidly when determining security prices that it is extremely difficult to gain a competitive edge by exploiting market anomalies.
- Over time, riskier assets provide higher expected returns as compensation to investors for accepting greater risk. However, investors may experience greater market fluctuations and losses in a down market.
- Adding high-risk, low-correlating asset classes to a portfolio can actually reduce volatility and increase expected rates of return.
- Passive asset class fund portfolios can be designed with the expectation of delivering over time the highest returns for a chosen level of risk.
Investing involves risk including the possible loss of principal. No guarantees of investment success can be offered or that a client's goals and objectives will be achieved. Investments will fluctuate and there will be periods where the investments may be worth less than the initial purchase value.