Evidence-Based Investing (EBI) and “passive” investing refer to the same investment approach.
However, EBI provides a better, more descriptive title for what this investment approach actually entails, whereas the term “passive” implies a lack of activity – which could not be further from the truth.
The act of implementing and maintaining an investment strategy utilizing a passive (i.e. evidenced-based) investing philosophy is much more complicated than the “passive” label would suggest.
EBI is a disciplined approach to investment management that takes into consideration data we have from the past and present, while acknowledging that we cannot correctly predict the future – and because of this, investors should not incur the extra costs that other speculative approaches introduce.
EBI Practitioners are long-term, strategic managers who understand the basic tenants of Modern Portfolio Theory and acknowledge diversification can be an investor’s best protection against risk. Further, EBI allows us to incorporate the evidence provided by the science of behavioral finance to not only understand how markets work, but how those participating in markets behave.
Practitioners do not believe in trying to outsmart markets because they believe markets are efficient over time. Discipline is key to being successful.
At Blueprint Financial Strategies, we practice evidence-based investing so that our clients can work confidently toward their long-term financial goals. Our investment strategies allow our clients to keep more of what the global markets offer, letting them focus on what matters most to them.