Diversified Portfolios
THESE ARE UNUSUAL TIMES FOR INVESTORS. WITH THE MARKETS RISING AND FALLING ERRATICALLY, SOME HAVE QUESTIONED THE VALUE OF DIVERSIFICATION - BUT WE HAVE NOT.
Hasty, speculative decisions aren’t advisable in any market. While we are not able to predict the future, we are able to look back carefully at the history of our capital markets and, judging by that history, we expect that the equity markets will recover and that volatility will decline as it has so often in the past.
Exactly when that recovery will happen, however, is a different, and much more difficult, question to answer. It is for this reason that we subscribe to long-term investment strategies, diversified portfolios and structural hedges against systemic risks, such as rising interest rates and inflation.
Lower Fees
Fund fees and expenses can eat away at your retirement savings
Financial services fees are hard to detect unless you read the fine, fine print about what’s going on with your investments. This is particularly true if you are purchasing funds with front- or back-end sales loads or high expense ratios. Over time, those fees will actually cut into your portfolio's return significantly. We help our clients minimize investment-related fees by selecting low-cost investment products.
Over a 20- or 30-year period, fund fees and expenses can really affect the compounding of your assets. The Department of Labor offers an example: If you have $25,000 right now in your 401(k) and just let it sit there, and your investment returns average 7% across the next 35 years with 0.5% annual fees, you will end up with $227,000 in 2045. But if those annual fees are set at 1.5%, you will end up with only $163,000 in 2045. A 1% difference in fees and expenses would leave you with 28% less money for retirement.
Liquid and transparent investments
If there is one lesson to take away from the events of the last few years, it is that complex financial engineering and "black box" investing don't enhance returns for individual investors.
That is why we invest only in those financial products, industries and companies that we thoroughly understand and that provide transparency to investors. We don't like surprises, and we know our clients don't either.
Why do we buy Exchange Traded Funds (ETFs) for our clients?
ETFs have become fundamental instruments in the pursuit of efficient investing. Unlike a conventional mutual fund, ETFs trade throughout the day and their underlying investments are available on a continuous basis. Compare that to mutual funds where you can only redeem your shares at the closing price of a trading day and the fund positions are only available quarterly.
In addition, ETFs have low operating costs, so they represent intriguing alternatives to mutual funds that can charge higher fees and expenses. With their very low charges and management fees, ETFs give investors an efficient and convenient way to build and rebalance an investment portfolio that has specific diversification objectives.
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