Investment Philosophy

Expertise: Our Investment Philosophy

The assumptions on which our investment philosophy and process have been structured are as follows:

• Our approach to portfolio design and manager analysis must be conducted on a forward looking basis. Anyone can sift through track records, but our investment process is focused on understanding whether a prospective design, strategy, or approach will add value in the future.

• Market opportunities arise and can be exploited by active management, but passive management can make sense in certain situations.

• Manager monitoring is focused on “why” results happened – not a simple benchmark comparison. We seek to understand the components that drive returns, whether they are sound and acceptable, and how they relate to the balance of the portfolio.

• Over 90% of the variability of portfolio performance is attributable to asset allocation. As a result, proper benchmarking achieved by a thorough understanding of a manager’s style is critical in evaluating performance. Efficient diversification is a crucial element in designing client portfolios to meet their goals.

• Consistent managers perform better in the long run: they rise to the top of their peer groups. Our bias is toward managers that have given us few surprises to the downside.

• Fees, expenses, and taxes are directly related to long-term performance, and thus, should be minimized. We favor low cost portfolios and use our leverage to often get better pricing than a typical client can independently negotiate.

Innovest believes that while many quantitative and qualitative measures can be employed to assess performance, ultimately the professional judgment of our analysts is paramount. We do not believe that a black box can successfully choose managers that will outperform going forward; we rely on our investment professionals to do so. Hence, “Performance Powered by People.”