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6710 Winkler
Rd. Suite 3
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Managing Client Needs with Care, Professionalism, Integrity and Timeliness. |
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Investment Management and Advisory |
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HomeFinancial
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We employ modern institutional approaches to investing. Methods formulated through academic research and proven by decades of experience. Modern portfolio theory (1952) was only the beginning, as it was soon followed by many other Professors and graduate students trying to make better sense of investing, and earning Nobel Laureates for their conclusions. One extensive study analyzed data from stock prices for the total stock market since 1925, into what is now known as the "Center for Research in Security Prices" (CRSP), which soon led to another paper that coined the phrase the"Efficient Market Hypothesis". This helped form the theoretical underpinnings for index investing, which led two graduate students to begin the first index funds in the country for institutional clients. Once word got around that AT&T, Chrysler and other pension plans had signed on to indexing for a small part of their portfolios, the "real world test" for indexing was on. Later, Vanguard brought this concept to the retail investor with the S&P 500 index fund, who followed the index so exactingly, that there was virtually no deviation from the underlying index of 500 stocks. While there is a price to be paid for following the index so rigidly, it nonetheless made it easier to compare other mutual fund managers to the index, and the results are now in. After three decades ...the proof is clear. The vast majority of active money managers do not come close to beating the index, and the very very few who have beaten it over a reasonably long period, have done so by only a small margin, and which is then usually followed by a period of significant underperformance. The risks of active management when combined with the additional costs, make most actively managed funds beneficial only to a stock-broker. In April 1981, the academics who creating the original (CRSP) study identifying size and valuation characteristics to the universe of stock prices, and who began the first institutional index portfolios started their own firm, catering to institutions and individual investors who work through approved registered investment advisors. Particularly notable is that these academically disciplined portfolio managers were able to structure well defined trading and ownership parameters, while factoring in size and value models to create several unique non-overlapping portfolios for the individual investor. They also recognized the tremendous cumulative effect of costs to portfolio performance, and adopted low institutional trading costs with a no-load structure to benefit the investor. An abundance of quantifiable portfolio factors make us confident these portfolios have not, and should not suffer the style-drift and overlap that most managed mutual funds experience. There is simply nothing more faithful than having proven portfolio rules based on academic research, when the management of those funds are run by academics and watched by other academics whose money is also managed in those portfolios. Studies also show that more than 90% of portfolio performance comes from proper investment allocation alone and we believe that for most portfolios, whether they be for institutions, pension plans or individual investors, a core portfolio strategy should employ multiple index portfolios and be relatively passive. We do that while adding one more critical step, identifying the needs of the individual investor and to construct a portfolio designed to achieve that investors needs. It should also be noted that with more than 700 funds in the marketplace, this requires a serious understanding of indexing differences and their alternatives in order to reach ones goals.
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Our Goal is To
Contribute to
our Clients'
Success
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