Evidence-based Drivers of Results
The conclusions from research are conclusive and compelling. There are evidence-based wealth management strategies that investors can employ to achieve greater outcomes. The best advisors are diligent and careful to keep up with the latest findings while not jumping from fad to fad. It is a full-time job that requires training, expertise, tools and time.
Please review the following research, which guides our strategies.
Certain factors have historically earned a long-term risk premium
“A large body of academic research highlights that long term equity portfolio performance can be explained by factors*. This research has been prevalent for over 40 years; Barra (now an MSCI company) for instance has undertaken the research of factors since the 1970s. Certain factors have historically earned a long-term risk premium and represent exposure to systematic sources of risk. Factor investing is the investment process that aims to harvest these risk premia through exposure to factors…
…Thus we distinguish between generic factors and “risk premia factors,” which have earned a persistent significant premium over long periods and reflect exposure to sources of systematic risk. All of the Fama-French factors count as risk premia factors since the aim of those original studies was to isolate asset pricing drivers….
…Empirical studies confirm that it is difficult for active managers to earn alpha. Studies by Malkiel (1995), Gruber (1996), Wermers (2000, 2003), and Jones and Wermers (2011) found that the median active manager generally does not outperform the cap weighted benchmark net of fees and even the small subset of those who do outperform are only able to maintain that outperformance for short periods. Studies have also found that active managers often tilt their portfolios towards well-known factors such as Value and Size and that these tilts account for a substantial portion of managers’ returns over market capitalization weighted benchmarks…”
Foundations of Factor Investing
MSCI Research Insight
* A factor can be thought of as any characteristic relating to a group of securities that is important in explaining their return and risk.
Measuring the importance of intelligent financial planning decisions
Measuring the Importance of Intelligent Financial Planning Decisions
Alpha, Beta, and Now… Gamma
Vanguard Quantifies the Value-add of Best Practices in Wealth Management
Putting a Value on Your Value
Please read our illustrative case studies* found on the home page to get a sense of the results that we have achieved for others.
*The details have been modified to protect our clients’ privacy. In addition, and you likely don’t know this, Registered Investment Advisors are not allowed to advertise testimonials per the Securities Act of 1940.
Please visit us for a complimentary discovery meeting, and we can discuss the results that are most important to you — and how we may be able to help you achieve them.