Investment Management

An Academic Approach

Traditionally, money managers have fallen into two camps: conventional active managers or index managers.

Conventional active managers attempt to outguess the markets.  Usually reliant on an individual or small team they attempt to identify misprices in securities or rely on forecasting to select undervalued securities or time markets.  This sounds pretty good.  Unfortunately it doesn't work very well.  Active management is not only difficult, it also generates higher expenses, trading costs and risks.  In fact, about 80% of equity fund managers and nearly 90% of fixed income managers underperform their benchmarks.  

Conversely, index managers do not attempt to beat a benchmark but rather hold a basket of stocks replicating a certain market index.  Indexing is simple, very low cost and likely to give you a positive result.  We already know that indexing will beat the vast majority of active managers (see the 80% underperformance rate above).  Indexing does have some limitations though - namely restrictions on which securities can be owned and being forced to buy and sell securities at exactly the same time as other index funds.  

We believe there is a better option than conventional active management or passive indexing.  Decades of academic research have identified market factors (or dimensions) that have historically resulted in higher expected returns.  This strategy is grounded in economic theory and backed by decades of empirical research.  This research has identified three primary dimensions of higher expected returns: company size, relative price and profitability.  These dimensions are well documented in markets around the world and across different time periods. 

A portfolio that emphasizes these dimensions while incorporating the also important concepts of diversification, smart tax management, expense control and most importantly discipline allows investors to pursue higher expected returns in their portfolios and enjoy a better investment experience.

Company Size

Also referred to as the small cap premium.  Small cap stocks have higher expected returns than large cap stocks.

Relative Price

The value premium.  Value stocks outperform growth stocks.


The profitability premium.  High profitability companies outperform low profitability companies.

Diversify Globally

Diversify Globally

It's a big world.  You never know which markets will outperform from year to year.  By holding a globally diversified portfolio, investors are positioned to capture returns wherever they occur.

Be Smart About Taxes

Be Smart About Taxes

It's not about what you make that matters - it's about what you get to spend.  Taxes matter in investing.  Led by an experienced CPA, we are well versed in tax optimization strategies.  Our proprietary portfolio tax overlay strategy is designed to help you maximize what you get to spend.

Manage Expenses

Manage Expenses

High costs can reduce performance.  High fees can contribute to underperformance because the higher a fund’s costs, the higher its return must be to outperform its benchmark. Therefore, investors may be able to increase the odds of a successful investment experience by avoiding funds with high expense ratios.

Most Importantly - Be Disciplined

Most Importantly - Be Disciplined

Investors that follow their instincts tend to make big mistakes.  Chasing performance and market timing are proven losing strategies.  Staying disciplined through market ups and downs is critical.  Learning to manage your emotions and look beyond today's headlines can lead to a better investment experience.  This is where we can help!

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