Mutual Funds
Building an effectively diversified investment portfolio requires more than just a selection of mutual funds boasting successful one or three year performance track records. With so much sound bite 'advice' in advertising, magazine articles, and television talk shows, it has become difficult for many investors to sort through the noise. Funds should be considered in two dimensions:
Individual Fund Selection - It is more than just prudence when we emphasize that 'past performance is not indicative of future results'. Principled investing requires an in-depth understanding of mutual fund composition, manager philosophies, valuation statistics, expenses, and much more, and all this must be considered as it relates to the current market context.
Portfolio Design - Each mutual fund in a portfolio should play a specific role for a specific reason. Many consultants and financial advisors seem to make recommendations by consulting images in their rear view mirrors. Such an approach can be effective when the landscape ahead is reasonably similar to that just left behind. However, particularly during major trend changes, we prefer to balance lessons in traditional investment theory with innovative thinking based on current trends and conditions.
Our strategy considers the ways the individual investments in a portfolio complement one another, seeking to provide multiple opportunities for growth while hedging the risk that varying market conditions might significantly damage the portfolio. While this does not eliminate the potential for loss, it allows us to do a more effective job of managing that risk.