Investment Philosophy
BWA’s Top 10 Investment Principles
1. Planning, strategy and communication are critical to good investment outcomes
We seek to forge deep, trusting relationships with clients where their needs and wants are freely and regularly discussed. Exploring values, goals and important relationships is a critical first step in our process and ensures that we advise you accordingly. Open communication leads to a better understanding of your unique situation, fosters a rewarding long-term relationship based on trust, and leads to better investment outcomes.
2. Safety first
When investing to achieve important life goals such as your children’s or grandchildren’s education, decades of retirement income, or long-term charitable commitments, we believe in safety first. Maintain a broadly diversified portfolio appropriate to your unique tolerance for risk and don’t make big bets.
3. Asset allocation decisions are the most important determinant of portfolio behavior
Asset allocation decisions play an outsized role in explaining the variability of returns and the long-term performance of a diversified portfolio. We believe our efforts are best spent strategically focusing on the right longer-term mix of stocks, bonds, alternative investments and cash rather than short-term market timing.
4. Asset-class implementation details matter as well
We seek to combine in a thoughtful and, where appropriate, tax-sensitive way, what we believe are best-in-class managers and index- or evidence-based funds across the full spectrum of asset classes. We believe our objective, research-based approach helps lead us to top managers and strategies and, importantly, aids us in combining them sensibly into what we believe are efficient and effective portfolios.
5. Identify and stay committed to value-added managers
We believe select active management can add value. This conviction may seem contrarian amidst the increasingly popular movement toward passive, market-cap index-based investments. We recognize that most active managers underperform unmanaged indexes. However, we aim to use value-added specialists who we believe truly add value net of the fees they charge. Identifying them – and, importantly, sticking with them even during inevitable and sometimes lengthy periods of underperformance – is the key. We believe patience, combined with access to and frequent conversations with managers, helps us avoid the common mistake of terminating a manager at the wrong time, and helps us benefit from the added value the manager delivers over time.
6. When selecting fund managers, it’s value that matters (even more than price)
Overall, the managers we use have well below-average expenses. Our goal is to deliver above-average risk-adjusted returns (which may not be realized) over long periods of time, with below-average expenses. The average expense ratios of our model portfolios have decreased over time, and it remains a goal to continue to reduce portfolio costs while not sacrificing expected net results.
7. Co-investments align interests
We look for our underlying fund managers to invest in the strategies that they oversee, ensuring that their interests are aligned with that of their fund.
8. Long-term perspective pays – take short-term predictions with a grain of salt
We believe that long-term results are what matter most. For their long-term goals, we aim to help clients accept slightly uncomfortable levels of volatility in the short run, where appropriate, in exchange for the potential to achieve higher returns in the long run. We help clients fight the instinctive tendency to focus on the short term, where there can be a lot of noise and not much signal. We believe that markets become more predictable the longer one’s investment horizon. Evidence suggests that even top forecasters can’t reliably and repeatedly make useful predictions about the near-term future.
9. Patience, patience, patience
In general, investment patience and gradualism (slow changes over time) are rewarded. Ongoing economic, market, asset-class and manager/strategy research informs our decision-making and often supports, rather than discourages, infrequent portfolio strategy changes.
10. Bigger is not always better
Our boutique setting located one hour from Wall Street, along with our research-based culture, helps avoid groupthink, bureaucracy, and conflicts of interest. We value our independence, and feel strongly that, especially with our unique resource access, bigger is not always better.
We seek to forge deep, trusting relationships with clients where their needs and wants are freely and regularly discussed. Exploring values, goals and important relationships is a critical first step in our process and ensures that we advise you accordingly. Open communication leads to a better understanding of your unique situation, fosters a rewarding long-term relationship based on trust, and leads to better investment outcomes.
2. Safety first
When investing to achieve important life goals such as your children’s or grandchildren’s education, decades of retirement income, or long-term charitable commitments, we believe in safety first. Maintain a broadly diversified portfolio appropriate to your unique tolerance for risk and don’t make big bets.
3. Asset allocation decisions are the most important determinant of portfolio behavior
Asset allocation decisions play an outsized role in explaining the variability of returns and the long-term performance of a diversified portfolio. We believe our efforts are best spent strategically focusing on the right longer-term mix of stocks, bonds, alternative investments and cash rather than short-term market timing.
4. Asset-class implementation details matter as well
We seek to combine in a thoughtful and, where appropriate, tax-sensitive way, what we believe are best-in-class managers and index- or evidence-based funds across the full spectrum of asset classes. We believe our objective, research-based approach helps lead us to top managers and strategies and, importantly, aids us in combining them sensibly into what we believe are efficient and effective portfolios.
5. Identify and stay committed to value-added managers
We believe select active management can add value. This conviction may seem contrarian amidst the increasingly popular movement toward passive, market-cap index-based investments. We recognize that most active managers underperform unmanaged indexes. However, we aim to use value-added specialists who we believe truly add value net of the fees they charge. Identifying them – and, importantly, sticking with them even during inevitable and sometimes lengthy periods of underperformance – is the key. We believe patience, combined with access to and frequent conversations with managers, helps us avoid the common mistake of terminating a manager at the wrong time, and helps us benefit from the added value the manager delivers over time.
6. When selecting fund managers, it’s value that matters (even more than price)
Overall, the managers we use have well below-average expenses. Our goal is to deliver above-average risk-adjusted returns (which may not be realized) over long periods of time, with below-average expenses. The average expense ratios of our model portfolios have decreased over time, and it remains a goal to continue to reduce portfolio costs while not sacrificing expected net results.
7. Co-investments align interests
We look for our underlying fund managers to invest in the strategies that they oversee, ensuring that their interests are aligned with that of their fund.
8. Long-term perspective pays – take short-term predictions with a grain of salt
We believe that long-term results are what matter most. For their long-term goals, we aim to help clients accept slightly uncomfortable levels of volatility in the short run, where appropriate, in exchange for the potential to achieve higher returns in the long run. We help clients fight the instinctive tendency to focus on the short term, where there can be a lot of noise and not much signal. We believe that markets become more predictable the longer one’s investment horizon. Evidence suggests that even top forecasters can’t reliably and repeatedly make useful predictions about the near-term future.
9. Patience, patience, patience
In general, investment patience and gradualism (slow changes over time) are rewarded. Ongoing economic, market, asset-class and manager/strategy research informs our decision-making and often supports, rather than discourages, infrequent portfolio strategy changes.
10. Bigger is not always better
Our boutique setting located one hour from Wall Street, along with our research-based culture, helps avoid groupthink, bureaucracy, and conflicts of interest. We value our independence, and feel strongly that, especially with our unique resource access, bigger is not always better.
