Guiding Principles
We are guided by the following principles in investing your money:
- An effective investment strategy should be integrated with an overall financial plan
- Risk and return are related. Investors only achieve a higher rate of return by taking on more risk.
- The only “free lunch” in the financial markets is diversification.
- Investors are best served by assuming that financial markets are efficient. That doesn’t mean that every investment is properly priced all the time; it simply means that it is extremely unlikely that individual investors will be able to profit from these perceived mis-pricings.
- The less you pay in fees the more money you keep. By lowering investment management fees, avoiding hidden costs and reducing taxes, you increase the amount that you keep.
- Active management (i.e., market timing or individual stock picking) doesn’t add value. Rather, it adds speculative risk and doesn’t work over time.
- Use only unbiased research from the world’s leading financial economists.
- Have a written investment policy statement which outlines your objectives, target asset allocation and risk tolerance.
Application of these principles
Having a sound philosophy is vital, but it must be properly implemented to be effective. We add value to the investment management process by focusing on the following controllable factors:
- Maintaining a disciplined approach.
- Focusing on the five risk factors that drive returns.
- Increasing the after tax rate of return by focusing on tax efficient asset location strategies and a buy and hold approach.
- Achieving lower trading costs by using a flexible and patient approach.
- Effectively rebalancing to a target asset allocation by the proper management of investment inflows and outflows.
