Our investment philosophy centers on managing both risk and return, through a process that places our client’s interests first. Industry research suggests that asset allocation is far more important to investment outcome than security selection, market timing or other factors combined. Therefore, striving to optimize portfolio allocation is our key focus.
We use an “outcome-based” approach to asset allocation. This process involves determining the combination of assets expected to generate the risk exposure, cash flow and average annual rate of return that is most consistent with each client’s stated goals. However, unlike traditional diversification approaches that emphasize U.S. stocks and investment-grade bonds, we utilize an expanded opportunity set of as many as 15 global asset classes in portfolio construction.
The following ideas and beliefs guide our approach to portfolio design and management:
1. Global diversification reduces portfolio risk, and improves return potential
2. Both active and passive management have a place in portfolio construction
3. Investor emotions and behavior often impact investment results
4. Initial valuation matters, and is a critical factor in determining the future return potential of an asset class
5. Substance is more important than form when selecting investments
6. Minimizing tax consequences in the investment process is important