Investment Philosophy

BEC’s investment style and philosophy are similar to the “endowment model” strategies utilized by many of the largest and most sophisticated institutional investors, but our approach substantially reduces total investment costs and improves liquidity and transparency. The key underlying tenet to the endowment model approach is that each asset class has a measurable historical return, volatility, and correlation, and thus, by adding multiple asset classes, the investor improves portfolio diversification, reduces overall correlation of portfolio returns, and lowers total portfolio risk levels relative to a given investment return. In plain English, it is our goal to achieve targeted investment return levels with lower volatility through a market cycle (generally 5-7 years). Our portfolios are designed around several core philosophies, including the following:

  • Value stocks outperform growth stocks over the long term
  • Small/midcap stocks outperform large cap stocks over the long term
  • Dividends account for a meaningful portion of long term equity returns
  • Asset class returns revert to the mean
  • Fees and taxes significantly detract from performance
  • Diversification among asset classes, geographic regions, industry sectors, and market capitalization reduces volatility of returns
  • Asset allocation is the most important determinant of an investor’s long term investment returns
  • An investor’s asset allocation should better reflect actual global market capitalization

Broad & Disciplined Asset Class Diversification