Investment Philosophy
Active Strategies vs. Our Approach
Active Strategies
Attempts to pick “winning” stocks
Generates higher expenses, trading costs and risks
Relies on forecasting to select “undervalued” securities
Times markets
Our Approach
Passive strategy adding value by portfolio design
Cost-effective
Structures (tilts) portfolios to emphasize areas of higher expected returns
Reduces volatility via Fixed Income
Active Strategies Have Low Odds of Success
Past performance is no guarantee of future results. Survivors are funds that were still in existence as of December 31, 2019. Outperformers are survivors that beat their respective benchmarks over the period. US-domiciled mutual fund data is from the CRSP Survivor-Bias-Free US Mutual Fund Database, provided by the Center for Research in Security Prices, University of Chicago.
Investment Approach
Clients trust our transparent, consistent investment approach.
MARKET PRICING EFFICIENCY
PORTFOLIO DESIGN MATTERS
Embrace Market Pricing
Millions of participants buy and sell securities in the world markets every day.
The new information buyers and sellers bring to the markets help set prices—and with each bit of new information, prices adjust accordingly.
If you do not believe that market prices are good estimates, you are pitting your knowledge or hunches against the combined knowledge of thousands or millions of other market participants.
In US dollars. Source: Dimensional, using data from Bloomberg LP. Includes primary and secondary exchange trading volume globally for equities. ETFs and funds are excluded. Daily averages were computed by calculating the trading volume of each stock daily as the closing price multiplied by shares traded that day. All such trading volume is summed up and divided by 252 as an approximate number of annual trading days.
From Insights To Implementation
Our investment philosophy is based on the power of market prices and guided by theoretical and empirical research.
An integrated portfolio design process adds value at each step. Research can be applied throughout the process for an advanced understanding of all aspects of investing.
Tilting
Decades of academic research and rigorous testing have identified areas in the market that have provided higher returns consistently such as: equities with low relative prices (value stocks) and/or relatively small market capitalization (small or mid-cap stocks).
Within well-diversified portfolios, we overweight these areas of higher expected return potential.
We construct portfolios to purse higher expected returns through a low-cost, well-diversified portfolio.
