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Our Investment Discipline

<strong>Asset Class Investing&#160;&#160;+&#160;&#160;Passive Management</strong>&#160;

Asset Class Investing  +  Passive Management 

(Modern Portfolio Theory)    (Efficient Market Theory)

Modern Portfolio Theory is the culmination of work from various academics starting in the late 1960's.  Harry Markowitz, Merton Miller, and William Sharpe received the Nobel Prize in economics for their contributions to this body of work.  Modern Portfolio Theory (MPT) is based on the following assumptions:

  • Over time, riskier assets provide higher returns for accepting greater risk.
  • Asset Class Selection determines the vast majority of investment performance.
  • Investment Markets are efficient in processing information rapidly. It is  improbable, some say. Impossible, to outperform market. Returns over the long run.

Enhancing Modern Portfolio Theory

By combining asset classes and investment disciplines that are individually more risky but have a low correlation to each other, you can actually reduce overall portfolio risk and retain the expectation for higher returns.

Our portfolio building process can include up to 15 different asset sectors 
based on:

  • Bonds vs. Stocks
  • U.S. Domestic vs. International
  • Large Companies vs. Small Companies
  • Value (distressed) vs. Growth (glamour)

Benefits of Passive, Asset Class Investing

1. Superior rates of return with minimal risk over the long run.

2. Passive, Asset Class Investing eliminates Active Management Risk.

3. Substantially reduced portfolio costs through the elimination of active management.

4. Lower portfolio expenses through reduced portfolio turnover as the result of holding asset classes.

5. Greater tax efficiency from lower portfolio turnover.

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