We apply ideas from the leading minds in financial economics to the practical world of investment management. And, as such, we base our approach on the following academic principals:

• Markets Are Efficient - Markets work and stock prices fully reflect all available information. This occurs because millions of participants in the market are actively competing to buy undervalued and sell overvalued stocks. While occasional temporary inefficiencies might occur, for investment purposes, equities are fairly priced. (See: "The Twenty Dollar Bill")


• Risk and Return Are Related - Asset classes with higher risk factors have higher expected returns than asset classes with lower risk factors. For instance, stocks have a higher expected return than bonds or T-bills.


• Diversification Is Key - Diversification is the antidote to uncertainty. Intuition tells you not to put all your eggs in one basket. The main point of diversification is to reduce risk rather than improve expected return. A diversified portfolio spreads risk over many different investments, smoothing the journey while concentrated investments add risk with no additional expected return.


• Structure Explains Performance - Asset allocation principally determines results in a broadly diversified portfolio. Since different asset classes play different roles in a portfolio, the whole is often greater than the sum of its parts. Investors have the ability to achieve greater expected returns with lower volatility than they would in a less comprehensive approach. (See: "Asset Class Selection")