Asset allocation built on efficient market hypothesis, diversification and academic research emotional inv
It is not easy to separate emotion from investment decisions. The media, stock market swings and “get rich quick” schemes can play on fear and create false hope. An investment cycle governed by impulsive decisions often leads to buying stocks at their peak and selling at their low. That is the opposite of what you need. We help remove emotion from the investment process and help you create a plan based on actions that consistently add value.
Together we will create an asset allocation with targets based on your risk tolerance and goals. As your portfolio drifts away from its targets, we rebalance periodically which ensures you buy low and sell high.
Markets are Efficient
We believe that markets work – stock prices reflect all available information and expectations about the future. Those who try to beat the market believe that they have a secret crystal ball that is unavailable to other investors. This generally results in high costs and undue risk. Research over a 10-year period ending in 2013 shows that 81% of stock managers and 85% of bond managers underperformed the market index. This is not surprising because market prices are the best estimates of actual value.
Value of Diversification
The global equity market is large and represents a world of investment opportunity. Diversification helps you capture what these global markets have to offer. Concentrating on one stock exposes you to unnecessary risk. Diversification, on the other hand, reduces risk and increases return over the long run. A well-diversified portfolio can provide opportunity for a more stable outcome than a single security. By holding a globally diversified portfolio, investors are positioned to capture returns whenever they occur.
How We Invest
We believe in using exchange-traded funds and institutional mutual funds from Dimensional Fund Advisors (DFA). This approach is backed by Nobel Prize winning research. The combination of academic research from the University of Chicago and the strong belief that market prices reflect all available information leads to the strategy of adding value in competitive markets. We cannot predict what markets will do but we can control costs.
The use of low cost exchange-traded funds and institutional mutual funds keep investor costs to a minimum.
What does this mean?
At FIT Advisors, we remove the guesswork and anxiety around investing. We create an investment plan based on market principles, informed by academic research, and tailored to a client’s specific needs and goals. Along the way, we help clients focus on actions that add investment value – managing cost, maintaining broad diversification and periodically rebalancing. We empower and encourage our clients to stay disciplined through various market conditions.
Our investment management services are 0.75% per year for the first $1,000,000 of assets and 0.5% for assets above.