We approach managing money and advising clients with the knowledge that investing success is determined not by attempting to predict the future, but by avoiding mistakes and being prepared for a range of outcomes. This overarching philosophy informs how we think about diversification and its limits, as well as the importance of reducing costs. This philosophy, combined with deep research and experience, inform our position that simple, well understood strategies outperform complex ones over the long run.
Our goal is to construct portfolios that dependably earn the highest return for the risk taken. The surest way to increase risk over the long term is invest in high cost strategies. Many investors mistakenly look to reduce fees by moving to passive index funds. The real mistake is paying high fees for private investments, such as private equity and hedge funds, which are operating in highly competitive markets. This combination results in few winners and many losers. Failing to observe the power of compound returns, investors who pay high fees all but assure themselves low returns over the long run.
Click on the arrow to see the Greenline advantage.
Taking big, concentrated bets may have the potential for large upside but in highly competitive financial markets, we often see these bets result in permanent wealth destruction. Fundamental diversification is not about holding a bit of everything but holding a few high quality assets that additionally protect against the major environments of wealth destruction: deflation and inflation. A balanced portfolio is fundamentally diversified to these economic environments.
We use a risk factor framework to analyze portfolios and determine where clients are exposed to concentrated risk. We can then engineer our portfolios to be complimentary and most diversifying. For example, we find most investors are unprepared for an environment of higher inflation and can build a portfolio to protect against this using natural resource equities, inflation-linked bonds and emerging market debt. We can also incorporate environmental, social and governance (ESG) restrictions into our process.
The custom asset allocations we engineer and manage for clients are timeless in their construction (based on research in over 20 countries, in every major asset class, and across over 130 years of data). We invest across every major asset class and every portfolio is custom designed after gathering specific client goals and existing conditions to require minimal movement after implementation in an effort to maximize returns to clients and minimize frictions.
Investors often think that making money requires complex structures and arrangements or black box trading strategies. In reality, the most successful investors stick with understandable strategies that they can maintain through the inevitable ups and downs of financial markets and economic cycles. Understandable and transparent strategies reduce risk and increase return. It is our role as advisors and thought partners to help our clients understand what they are investing in so they can stick with it over the long run.