Investment Management

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Our Beliefs

  1. We believe markets are mostly efficient but aren’t perfect:  Asset allocation to diversify portfolios is important but we don’t take Vanguard index funds as gospel. Academic research has shown that portfolios exposed to the equity risk premium, size, value, and momentum characteristics,  generate higher expected returns than passive portfolios.
  2. We believe in protecting portfolios from downside: A buy and hold philosophy is great in theory but very hard to do in practice. Arming a portfolio with protection from large losses matters and trend-following seems to be a reasonable approach.
  3. We believe in getting different risk exposures at an affordable cost, all else being equal: We are cognizant of cost and its ability to create long-term win-wins.

Pursuing a Better Investment Experience

What We Run Away From!

We Run From High Fee Stock and Bond Funds.  The simple average expense ratio of equity mutual funds (the average for all equity mutual funds offered for sale) was 1.28 percent in 2016.  Our recommended portfolios typically have weighted average expense ratios of under 0.5%.  Many mutual funds charge as much as 1% or more annually in 12(b)-1 fees. 

Example: If you were investing $10,000 per year into a mutual fund with a 5% sales load, you would be paying about $1,000 too much per year (due to the sales load).

Example: If you have $500,000 in typical mutual funds (i.e., with an annual expense ratio of 1.28%), you are paying at least $6,400 per year in annual fees.  If you instead used a diversified portfolio of best-in-class funds (which might have a weighted average expense ratio of less than 0.5%), you would pay $2,500 per year in fees. That is an extra $3,900 lost to fees over the course of the year. 
We Run From Whole Life Insurance Policies.  In our experience, we find that many people who buy life insurance either buy the wrong kind, too much or both.  We find that unless you have an estate planning need or meet other special circumstances, you are better off using term life insurance to cover your insurance needs. 

We Run From Most Annuities.  Variable Annuities have high fees that usually dramatically exceed the benefit of tax deferral. Fees typically are very high – at least 2% per year, including “mortality and expenses.”  Some variable annuities cost 3-4% per year. A slight benefit to the variable annuity is it does protect the owner from malpractice suits, in the case of the medical profession. Investment options are also typically limited and often have high underlying expense ratios. Some annuities such as a Single Premium Immediate Annuity or Deferred (aka Longevity) Annuities may make sense in special circumstances.

If you are stuck in one these products we may be able to assist you.  If you are in a Variable Annuity inside a retirement plan or an IRA there maybe rollover opportunities. Annuities outside of retirement accounts, we can look at lower cost annuity options.