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The Nobel-Prize Advantage
Our investment philosophy is rooted in over half a century of scholarly investigations and Nobel Prize-winning theories. We view markets as partners, not adversaries. Rather than wasting time seeking out market inaccuracies, we capitalize on the ways that they get it right.
Research indicates that the most substantial factor influencing returns is the decision on how to distribute assets. Thus, we focus our efforts on determining the overall portfolio composition and asset allocation. While it doesn’t eliminate the risk of market losses, diversification minimizes the random misfortunes associated with individual securities and positions your portfolio to benefit from broader economic trends.
In contrast to index funds that adhere to standard benchmarks, we employ equity asset classes based on a security’s market capitalization and price-to-book ratio, meeting specified eligibility criteria. To achieve the purest representation possible, we exclude securities that don’t exhibit the general characteristics of the defined asset class. We also eliminate securities lacking sufficient liquidity for cost-effective trading.
Dimensions of Risk
Expected return disparities are largely determined by factors such as company size, relative price, and profitability. Both academic research and results from experienced investors demonstrate that small companies have higher anticipated returns compared to large companies.
Cost Controls
The cost of investing is a pivotal factor in portfolio construction. Portfolios are designed to represent the targeted asset classes and markets at the lowest possible cost. We aim to minimize turnover and only execute trades when there is a quantifiable advantage.
Tax Mitigation
Our portfolio construction is structured to minimize the impact of taxes. We take into account the variations in tax implications for different types of client accounts, such as taxable, tax-deferred retirement vehicles, and trusts. Each of these accounts may have distinct tax considerations. Therefore, the placement of assets within these various accounts significantly affects long-term wealth accumulation.
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