Investment Philosophy & Process

• The purpose of investing is to allocate capital to appropriate investments that match or offset specific liabilities, risks or goals directed by the client (Liability Matching) and within given risk parameters established by the client, namely risk tolerance, risk capacity and overall objectives.
• In order to grow capital over time, assets must be fully invested and attempts to time market volatility are generally futile. Investments should be evaluated on the time horizon of the goal or objective they are designed to meet. Patience and long-term orientation are crucial to the process.
• Portfolio diversification can help reduce overall portfolio volatility and deliver more consistent, risk-adjusted returns. Every investment in the portfolio must serve a purpose in achieving the overall account objective by positively contributing to the targeted risk/reward level.
• Manager efforts are best allocated to variables that we can both control and have a material impact on returns when making investment decisions, particularly in identifying inputs that have an outsized impact on results (Pareto Principle). Minimizing the effects of false precision and overconfidence by thinking probabilistically to reach expected scenarios or value of assets is of the highest importance in this process.
• The attractiveness of any investment is directly proportional to the price paid, the greatest asset in the world can be a terrible investment (Price is not the same as value). Individual equities are part ownership of companies and require a different analysis than other possible investments and more passive strategies.
• Portfolios are dynamic in nature – strategic allocations with active oversight to take advantage of market opportunities provide the core of long-term portfolios and thus require long-term projections, trends and liabilities to match. Satellite allocations are ideal for short and intermediate term dislocations in global markets, economics and individual securities.
• Minimizing portfolio drag from fees and expenses by prioritizing individual securities and finding the lowest cost funds, when necessary, are a priority.
• The underlying approach to managing the Portfolio shall be therefore to optimize the risk-return relationship appropriate to the Investor’s needs and goals as elaborated above.

We utilize a Core and Satellite approach that aims to balance the risk and return of various assets in order to achieve the client's stated objectives.

In Traditional Portfolios, the Core consists primarily of low-cost index ETFs, Fixed Income and other investments that provide broad exposure to mature asset classes throughout the world and create a ballast for the Satellite holdings.

Satellite holdings can be thought of as a tactical overlay, they include individual stocks, thematic investments, sector bets and event-driven ideas but tend to be more variable than Core holdings. For a visual representation of how we think about constructing portfolios, see the Investment Funnel Graphic.