INVESTMENTS

Investment Portfolios constructed on sound academic base, not chance or subjectivity

 

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The FreE Lunch of investing

Diversification.  By allocating capital across different markets, segments and asset classes, investors are able to reduce their risk without sacrificing return. We use highly diversified exchange traded funds and low cost institutional class mutual funds to build our portfolios, not individual security selections.

 

 

Active vs Indexing

While the debate between active management vs indexing rages on, we recognize that no decisive winner has been declared for a reason.  It is becoming increasingly clear that the cost to implement and ability to stick to your strategy is the true determinant of success.  We apply a passive approach that yields the benefits of tax and cost efficiency, but capitalizes on our ability to maintain consistent exposure to a given market segment and allows for flexible trading.  In certain situations, we recognize active management may be necessary to access markets where blanket exposure may be inefficient or to capture academically proven premiums in areas such as momentum and trend.

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GLobal Portfolios

Exposure to the entire investing universe best harnesses the power of diversification.  The United States represents approximately 50% of the available investment universe and contributes only 22% to world GDP.  There are opportunities and attractive valuations everywhere. 

In addition to the traditional asset classes of stocks, bonds, and cash, exposure to commodities, currencies and real assets can have enormous benefits and reduced volatility over time.

 

 

AcademIc ResEarch

Academic research is clear: value, profitability, and size tilts have earned higher returns, historically.  All three factors can be accessed though low cost passive vehicles.  Our Investment philosophy is driven by academic research on factors of return.  In certain market conditions, we employ trend and momentum overlays. 

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Efficiency

Investment management goes further than portfolio construction.  It encompasses wealth management strategy such as re-balancing, tax loss harvesting, and asset location.   All shown to be able to increase overall performance over time.

 

 

DISCIPLINE

There's a clear reason why many investors under-perform markets.  Emotions have an enormous bearing on decision making, especially during volatile times.  Spontaneous departures from carefully crafted asset allocation plans can be costly.  Attempts to outguess the markets rarely pay and chasing winners often lead to a dead end.

 

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WHAT IS THE DIFFERENCE BETWEEN EVIDENCE-BASED INVESTING AND PASSIVE INVESTING?

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. 

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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 active management introduces in hiring talent and buying systems to try to beat markets. EBI Practitioners are long-term, strategic managers who follow the tenants of Modern Portfolio Theory and believe diversification is an investor’s best protection against risk. 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.

1 Modern Portfolio Theory (MPT), a hypothesis put forth by Harry Markowitz in his paper "Portfolio Selection," (published in 1952 by the Journal of Finance) is an investment theory based on the idea that risk-averse investors can construct portfolios to optimize or maximize expected return based on a given level of market risk, emphasizing that risk is an inherent part of higher reward. It is one of the most important and influential economic theories dealing with finance and investment.

+ Do you use individual stocks in portfolios?

We use highly diversified exchange traded funds and low cost institutional class mutual funds to build our portfolios, not individual security selections.

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