Investment Philosophy

Our investment philosophy reflects a long-term oriented approach to investing and is influenced by our belief in the following principles:

Diversification

Diversification is perhaps the most important component to reaching long-range financial goals. A diversified, multi-manager approach can reduce the various risk factors affecting an investment portfolio. The resulting reduction in volatility allows for a more disciplined investment plan, which is critical to the achievement of long-term financial goals.

Market Inefficiency

The Efficient Market Hypothesis (EMH) theorizes that no equity manager can outperform the market over the long-term, and those that do are a result of random chance. In fact, many managers do consistently generate excess returns over extended periods, and the effort to identify these managers can generate additional profits versus a passive indexed approach. However, certain markets are much more efficient. We believe that the investment grade bond market is one of these markets, and that in this area a passive indexed approach is preferred.

Reversion to the Mean

All asset classes gravitate toward their historical long-term, risk-adjusted rates of return. Within these asset classes, different sectors and security selection methods will similarly gravitate toward common risk-adjusted rates of return over the long-term. An investor can both increase his return over time and reduce downside risk by focusing on opportunities “below the mean” and de-emphasizing popular investments “above the mean”.

Independent Thought

In order to outperform the capital markets over the long-term, an advisor must rely on objective research and constantly question the conventional wisdom of the day. At times of extreme investor enthusiasm or fear, this often means taking a contrarian stance that does not “follow the crowd”.