Investment Philosophy and Process

When we build your portfolio, we put to use a variety of asset classes like U.S. stocks and bonds, foreign stocks and bonds, real estate, and commodities. Then based on your risk tolerance, financial goals, return expectations, and other factors, we build your portfolio to be "conservative" or "aggressive" or somewhere in between. 

Disciplined

People say you can't have your cake and eat it too. The same goes for investing. So we build your portfolio to optimize the trade-off between risk and reward. Then we methodically go through a routine, rigorous, and structured evaluation process of your portfolio. 

Diversified

We focus on diversifying your portfolio by using asset classes that don't move in tandem with each other (low correlation). Combining low-correlated asset classes helps mitigate overall portfolio volatility which adds potential for better long-term risk reduction.

Valuation-Driven

We analyze macroeconomic and financial data to evaluate whether an asset class is too expensive, just right, or cheap in our view. Then, we might adjust weights between asset classes offering best and worst perceived value and potential for return.

Read if you can retire on $2 million

Time and again, academic studies have found that asset allocation has almost everything to do with investment return variation in investment portfolios.

Asset Allocation

We design your investment portfolio based on the principles of asset allocation. Why? Because time and again, academic studies have found that asset allocation has almost everything (over 90%) to do with investment return variation in investment portfolios. These studies also found that picking the right stocks or timing the market had virtually nothing to do with it.

Asset Class Returns

We look at historical return statistics of each asset class. What is an asset class? U.S. stocks and bonds are assets classes. So are foreign stocks and bonds, real estate, and commodities, etc. Analyzing these statistics helps us evaluate how each asset is likely to contribute to your overall portfolio return.

Asset Class Risk

Evaluating asset class return statistics is important, but that's only half the picture. We also take a deep dive into risk statistics of each asset class. Generally, over the long term, the higher the return, the higher the risk. Naturally, as we design your portfolio, we are fully mindful of both return and risk. 

Asset Class Correlations

Once we evaluate asset class return and risk statistics, we measure and combine different asset classes that don't move in tandem with each other (low correlation). Combining low-correlated asset classes helps reduce your overall risk over time and results in a diversified, efficient portfolio.

The first of academic research on asset allocation on investment return variation was conducted by Brinson, Beebower and Singer (Financial Analysts Journal, 1986 and 1991).
Diversification does not ensure a profit or protect against loss in a declining market. 

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