Risk Based Investment Portfolio Strategies

 

Sifting through the complexities of capital markets and investment alternatives is a daunting task even for experienced investment professionals. Trying to analyze myriad numbers and reports that cascade daily from both government and private sector sources is mind-numbing. But often the best solution to solving complex problems is the one with the fewest assumptions.

Working closely with Dimensional Fund Advisors, our portfolio construction strategies are based on balancing trade-offs between risks, costs, and expected returns. DFA strategies are grounded in the academic research conducted by Nobel Prize winning financial economists. Rather than try to identify pricing mistakes and pick future market winners (which empirical studies have proven to be futile and costly), we recognize that dimensions of higher expected returns exist in global capital markets.

Equity investments have a higher expected return than fixed income investments. Company size, relative value, and profitability are market dimensions that can be studied and measured to identify the source of higher expected returns for equities.

Fixed income returns are a function of longer vs shorter maturities and higher vs lower credit qualities. Portfolios are constructed around these dimensions that are logical, data-driven, cost efficient and diversified.

 

Who is rich? He that is content. Who is that? Nobody.
Benjamin Franklin