At BEC, our investment philosophy is driven by the belief that the investment process has become increasingly complex and global in nature. There are few solutions available in the market that provide adequate diversification across asset class, geography, sector or market capitalization in a highly liquid and cost and tax efficient manner. While the BEC investment model is sophisticated, we take a common sense approach to investing and have designed our portfolios to benefit from a number of fundamental and quantifiable investment truths which have proven out over long term investment horizons. We also have a number of personal investment beliefs that guide our decisions.
Over Time There Are Certain Quantifiable Investment Truths
- Asset allocation is the most important driver of long term returns and risk management.
- Passive management consistently outperforms active management.
- Value stocks outperform growth stocks.
- Small/midcap stocks outperform large cap stocks.
- Dividends account for a meaningful portion of long term equity returns.
- Asset class returns revert to the mean.
- Fees, taxes, and transaction costs significantly detract from investment performance.
- Diversification among asset classes, geographic regions, industry sectors, and market capitalization reduces variability of returns.
- There is no return without risk.
Our Investment Beliefs
- Portfolios should favor equity over fixed income and alternatives.
- An investor’s asset allocation should better reflect actual global market capitalization.
- Adding liquid alternative investments to a portfolio provides important diversification benefits.
- Market overreactions create attractive buy and sell opportunities for attentive contrarian investors.
- The potential/probability of capital loss is a better measure of risk than traditional market volatility metrics.
- Risk is better managed through systematic and disciplined tactical asset allocation.