Investment Management
We marry low-cost passive investments to active overlay reducing volatility when forward indicators suggest.
There is a current battle of investment styles: Active vs. Passive. Which method is correct? We believe that both are. Active Managers, especially those focused on tactical trading, have drastically underperformed their benchmarks over the last decade. Passive investments have performed as expected, but are you comfortable in these vehicles given our location in the Business Cycle?
We marry low-cost, passive investments with an active overlay to reduce volatility when forward indicators prescribe. You will never be invested in a portfolio with the ability to go from 100% equities to cash in a single day – This is a dangerous strategy. Our markets are efficient, and long-term assets should be invested with long-term strategies. The volatility reduction strategies can serve two purposes: 1) Reduce portfolio losses when making withdrawals in down markets; and 2) Provide outperformance in up markets, as compared to your benchmark.
One of the biggest mistakes made by investors (and the majority of investment advisors) is systematically withdrawing funds during market declines. This compounds the effects of negative returns. We maintain separate cash management accounts for clients that provide liquidity during these volatile times. The primary objective of these accounts is stability, but they are also poised to earn yield in short-term investments.