Investment Management

Our focus is on wealth management. We believe success in properly managing client assets is not measured by performance statistics, but by our clients’ success in achieving their goals.We answer only to our clients, ensuring that the investments we recommend to them are those that we believe to be appropriate for them. Our investment philosophy centers around focusing on the things you can control, not the things you can’t control.

We believe that successful wealth management is about understanding and managing risk. We focus on developing a disciplined investment strategy that will provide our clients the investment returns they need with the least risk possible to their assets.

Conventional market approaches are based around trying to outguess the market – where it’s heading and where to be (or not be) in the future.

  • Market Efficiency – with millions of participants, market prices quickly react to new information
  • Diversification (picture of quilt)
  • Managed Risks
  • Don’t chase performance
  • Minimize costs – high investment costs and poor tax-management are the largest detriment to a portfolios return.

Asset location is the strategic division of assets across an investor’s accounts based on those assets’ tax liability.  Proper asset location is extremely important in maximizing the investor’s net return.  It is advantageous to place tax-efficient investments in taxable accounts and tax-inefficient investments in tax-deferred accounts to the greatest extent possible.

By placing high income investments in a tax-deferred account investors can shelter much of that income from taxes. Meanwhile, low-income, low-turnover investments such as large-cap stock funds can be placed in taxable accounts due to their greater tax efficiency.

Proper asset location can help many investors increase their after-tax return without assuming additional risk, and this is a major focus of our portfolio management efforts.

While all stock investors have to live with a certain amount of volatility, the goal should be to structure your portfolio so that it doesn’t experience unnecessary volatility. While there are many ideas about the best way to accomplish this goal, only one asset-allocation strategy has won a Nobel Prize in Economic Science for its efforts in this area:  Modern Portfolio Theory (MPT).

According to MPT, asset classes and investment styles (such as growth and value, large and small, foreign and domestic, etc.) should be combined in a portfolio with an understanding of the effect those asset classes have on each other, not just evaluated on their own. For example, large U.S. growth stocks and REIT (real estate) stocks each have a high degree of volatility on their own, but when they are combined in a portfolio they actually help reduce the portfolio’s volatility.  This is because those two asset classes historically have a low correlation relative to one another; when large growth stocks are in favor, REIT stocks tend to be out of favor, and vice versa.

Volatility is an inherent part of stock investing; there are times, such as 2002 and 2008, when nearly every equity asset class declines and there is no short-term benefit to be had from diversification. What MPT does accomplish over the long term is to reduce the extreme volatility that comes from being concentrated in just a few stocks or market sectors, something that will increase your compound returns over time compared to less efficiently designed portfolios.