Risk Means Opportunity

We stand by the philosophy that investors are rewarded in proportion to the risk they take. Framing decisions around compensated risk factors in the equity and bond markets connects investors to the forces that create opportunities to build wealth over time. While returns come from risk, not all risk is created equal. We believe that everything we have learned about expected returns in the equity markets can be summarized in three dimensions. The first dimension is that stocks are riskier than bonds and have greater expected returns. Relative performance among stocks is largely driven by the two other dimensions: small/large and value/growth. Many economists believe that small cap and value stocks outperform because the market rationally discounts their prices to reflect underlying risk. The lower prices give investors greater upside as compensation for bearing this risk.

The Fixed Income Factors

We approach fixed income primarily as a strategy to maximize overall portfolio performance. Shorter-term, high-quality debt instruments tend to have less risk. In other words, longer-term instruments are risker than shorter-term ones, and instruments of lower credit quality are riskier than those with higher credit quality. Our lower-risk bond strategies help temper total portfolio volatility to take more risk in equities, where expected returns are greater.

Deliberate & Diversified

We believe that diversification is essential to a solid investment strategy because it washes away the random fortunes of individual stocks and positions portfolios to capture the returns of broad economic forces. We diversify not only in the amount of securities held but also in the range of capital market strategies we explore and develop. In this way, we focus on the factors that drive investment returns and reduce excess and undesirable risk. Specifically, we diversify your portfolio based on your risk/reward ratio and your objectives.