Our investment philosophy is based on the tenets of Modern Portfolio Theory and the Efficient Markets Hypothesis. These Nobel Prize–winning frameworks have been developed and refined over the last several decades by academic researchers looking to mathematically model the effects of asset risk, correlation and diversification on expected investment portfolio returns.
Our portfolios are constructed using the following foundational principles:
- Markets are efficient. Research has shown that over the long run, markets are efficient and current prices reflect the cumulative knowledge and expectations of all investors. Short-term pricing anomalies may exist from time to time, but the information and resources needed to capture these anomalies prevent any one investor from routinely profiting at the expense of all other investors.
- Risk and return are related. In order to earn higher returns, an investor must assume more risk. In order to decrease risk, an investor must be willing to accept lower returns. We at Sanctuary work with you to determine your comfort level on the risk/return spectrum in order to balance the objectives of strong portfolio returns without exposing you to unwanted risk. Properly assessing your tolerance and need for risk is perhaps the most critical piece of your investment puzzle.
- Diversification is essential. Placing all your eggs in one basket is a poor practice, especially in investing. Concentrated investments add risk without adding expected return. Investing across a broad range of asset classes, according to your objectives, can dampen volatility while still capturing the returns necessary to reach your goals.
- Structure delivers performance. Contrary to common assumptions, past and current research has shown that the strongest factor of a portfolio's return is neither stock selection nor market timing. Our investment strategies are specifically structured to expose your portfolio to the factors that drive returns by managing and capturing the different perspectives of risk.
- Portfolios must be tailored. Because no two investors share the same goals, risk tolerance or financial circumstances, individual investment portfolios must be specifically tailored and updated as circumstances change. Advisors with hundreds (or even thousands) of clients cannot effectively do this. Because we limit our practice size, you can be assured that the counsel and advice you receive is unique to your specific situation.
We strongly believe in minimizing expenses for the client. Any redundant, additional fee is simply an unnecessary drag on portfolio performance. To address this, we primarily use institutional-class, low-cost, scientifically engineered funds to construct your portfolio.