Our Investment Philosophy

Our investment management philosophy is built on the belief that information relative to a security is quickly reflected in the price of  that security.  We believe the markets are quite efficient, making it very difficult for active stock pickers to beat their benchmarks over the long term.  Therefore, we invest mainly in baskets of securities called Exchange Traded Funds (ETFs), with some utilization of Index Funds.

Studies have shown that how money is distributed across asset classes is the most important decision in determining long-term returns.  Considerable time is dedicated to the process of establishing an appropriate asset allocation for each client.  The portion of a portfolio allocated to each of the major asset classes; stocks, bonds, real estate, and cash, is based on an understanding of our client's risk tolerance, the current portfolio value, the length of time before withdrawals will start, the number of years withdrawals will continue, and the expected dollar amount to be withdrawn annually. 

The securities purchased  to implement the asset allocations strategy, are selected through in-depth research and analysis. 
   
Why do we use ETFs instead of Index Funds? 

Both types of securites are low cost, tax efficient vehicles for investing.  We elect ETFs predominately for their ability to trade like a stock, giving us more knowledge and control of the price of each security we buy and sell.  Index funds trade at the end-of-day price.  Therefore,  fund prices on transactions made throughout the day are not known until the markets close.  While we do not make frequent trades in the portfolios, when we decide the time is right to buy or sell, knowing the price we pay or receive is important to us. 

What type of fees will you pay?

There are three types of fees incurred; the internal fees of the ETF or Index Fund and transaction costs are fees charged by third party service providers.  We do not receive any portion.  The third fee is our fee for managing your portfolio(s).  That is the only fee we receive.  We manage money with a conscious effort to keep your fees as low as possible without sacrificing
returns. 

ETF and Fund Fees
Domestic ETF and Index Funds, meaning those securities investing in broad U.S. stocks and bonds, generally vary in our portfolios between .07% - .5% of net asset value.  International securities we invest in generally have an internal expense greater than .5% but less than 1.% .  These expenses are deducted at the fund level, reducing the fund's return. 

Transaction Fee
When an ETF is bought or sold a commission is charged by the brokerage firm handling the transaction.   To keep costs low, we utilize TD Amertrade, a low transaction fee brokerage firm.   Index funds generally do not have a transaction fee.

As the number of ETFs has expanded to include a variety of unproven management techniques, so have their expenses. 
Our analysis and selection process generally eliminates them from the pool of potential investable securities.  There are a number of reasons for not being early adopters, such as low transaction volume which tends to create a discount or premium an ETF is selling for relative to its net asset value, and the lack of a track record to prove the technique can be executed successfully. 

Our Management Fee
The management fee is the fee we charge to manage the portfolio.  Our process includes a risk tolerance assessment of each investor.  Gathering knowledge of the client's goals, taxes, time horizon, specific wishes, and special circumstances. 

Portfolios of $250,000 up to $1 million are assessed an annual fee of .7% of assets under management.  Portfolios of $1 - 5 million are charged .6%.  Portfolios greater than $5 million are negotiated.  Fees are assessed at the end of each quarter, and paid the following month.   

Families may combine their portfolios' values if together they will meet the minimum or the $1 million reduced fee.   These minimums may also be waived if a client, who meets the minimum, refers a family member or friend. 

Please call or email with questions or to set up a free consultation.  We seek long term relationships, and that starts with getting to know each other.