Our Investment Approach
Our investment process is guided by the most fundamental principles of successful long-term investing: Growth of capital is maximized by investing in the equity markets. Control of volatility is best achieved through diversification. Returns are maximized by controlling costs and minimizing taxes.
The way we execute against these beliefs is what distinguishes us as an investment firm. Through a disciplined approach in our mutual fund based Select Portfolios or our separately managed Structured Leaders Portfolios, we've achieved superior long-term performance, while ensuring consistency and repeatability among our client accounts.
We believe that the investment environment over the next twenty years will be dramatically different from the last twenty. We expect to see higher interest rates, greater demand for commodities, higher tax rates, and lower rates of earnings growth for corporations. In that environment, we do not expect to see consistent double-digit increases in share prices as we saw, for instance, in the 1980s. The practical implication of this forecast is that in this dramatically different environment, active management should deliver superior performance to passive, buy-and-hold strategies.
The core of each portfolio is a value-biased strategic asset allocation matched to an investor's objectives and risk profile. Particular emphasis is placed on time horizon and management of downside risk.
We always strive to generate returns that exceed our benchmarks while avoiding excessive downside risk. To meet these objectives we combine a "core" portfolio with a relatively lower risk profile with a "strategic" portfolio that will address cyclical and secular opportunities. This process of "risk budgeting" allows us to allocate risk to a small portion of the portfolio while also taking advantage of opportunities revealed by our forecasting.
Our forecasting process drives our decision-making process. We develop both a 1-to-5 year cyclical forecast as well as a longer term, secular forecast that will help us identify important generational, social, political or macro-economic trends.
Our strategies have a proven track record of superior performance in both up and down markets. All portfolios emphasize tax efficiency and low expense.