We believe markets are efficient - most assets are priced fairly, most of the time. However, fear & greed do occasionally drive the market, creating opportunities for astute investors to outperform.
We believe that asset allocation is the primary determinant of long-term portfolio performance.
Concentrated portfolios, either in individual stocks or sectors or with specific managers, are risky & inappropriate for clients. Multi-asset class and multi-manager portfolios are more appropriate.
We believe that, over time, value portfolios provide superior returns. However, we also believe the elimination of growth allocations completely will result in interim divergences that our clients would find unacceptable. We believe a 2/3 weighting for value and 1/3 growth is appropriate in most market conditions.
We use both Active & Passive management. Passive offers lower transaction costs, minimal asset drift, and tax-efficiency, and there is significant research suggesting long-term superior performance. Active offers the opportunity to outperform & controlled volatility. Passive management is more appropriate for value portfolios, and active management for growth portfolios.
We believe that professional money managers provide results far superior to client or broker directed security selection & management. With rare excemption, separate account management (including wrap accounts) is inefficient & expensive. The universe of public and institutional funds & ETF's offers the best alternatives for superior management of multi-asset class portfolios in our opinion.
We believe that clients need total return, not just dividends & interest. The concept of an "income" portfolio places unnecessary restrictions on portfolio design.
Our asset allocation decisions assume a minimum of 3 year time frame.
We believe tax issues must be considered. However, the goal of tax planning should be to maximize after-tax returns, not to minimize taxes.
We believe cash (money market & CDs) is an important part of a diversified portfolio. Although cash has historically been the lowest-returning investment over long-term, it is the ultimate safe investment, and always has a role, albeit small, in our portfolios.