Once the asset classes have been selected and the allocation defined, the next step in building a proper portfolio is to identity the vehicle that will give our clients full and efficient exposure to the asset classes.
To do so, we employ an evidenced-based approach that is built upon academic research, market history, and modern finance theory to filter out the noise of the markets and focus on the factors that truly matter to long-term investment performance.
Often this evidence-based approach leads us to investment vehicles with the following characteristics:
- Based on academic research and supported by market history
- Highly effective at capturing its asset class objective
- Low cost implementation
- High tax efficiency
- Added value through portfolio management and trading
The importance of these attributes varies across market segments. Ultimately, we pay attention to the factors that matter most in each segment of the market and use the right managers who can exploit those factors most effectively.
If a low-cost, evidenced-based vehicle is not applicable to a specific asset class or market segment, we may choose a more conventional manger-driven approach with the following characteristics:
- A well communicated and understandable strategy
- Proven ability to add value
- A culture that places shareholder interest above all else and focuses on investment management, not asset gathering
- Access to institutional products and pricing