An evidence driven approach.
Portfolios are designed to help you achieve your financial goals. Risky practices like trying to time the market, anticipate trends or identify mispriced investments may be highly unreliable ways to build wealth.
Evidence-Driven Investing is fueled by data with over 50 years of research, and rooted in diversification and tax-aware investments.
Evidence driven portfolios are built on five pillars
Traditional Portfolio vs. Evidence-Driven Portfolio
Markets are highly efficient
Billions of dollars are traded daily where buyers and sellers come together and agree on a price. Given so much competition, Evidence-Driven Investing believes the current price reflects both the latest news and the latest outlook for the investment and the economy. This approach presumes the investment’s price is the best estimate of the current value and doesn’t try to outstmart the market.
Risk and expected reward are related.
If you want the potential for more returns, you’ll need to accept more risk and likely greater fluctuations in value. Sometimes these risks pay off with more return, but sometimes they result in losses. Although adding more unique sources of risk and return can create a portfolio with steadier growth, you shouldn’t take more risk than you’re comfortable with.
Diversification is essential.
Diversification has been called the only free lunch in investing. This is because using a single stock, strategy or investment type is riskier than mixing lots of different types of investments. Holding multiple investments reduces the risk that any single investment will cause a drag on portfolio performance.
Pursue factors of returns.
Research has shown that allocating more of your portfolio to companies that share certain characteristics can increase your potential for return. Although these investments typically bring more risk, Evidence-Driven Investing portfolios are built to most efficiently allocate across multiple sources of risk — even if it means performing differently from headline indexes.
Focus on what you can control.
Don’t try to predict interest rates, anticipate the impact of government actions or outsmart other traders. Instead, focus on the areas that can be controlled — such as setting a thoughtful investment strategy and following a disciplined review process.