ADVANTAGES OF OUR APPROACH
We believe that our investment approach creates cost-efficient, globally diversified portfolios that have the following advantages.
1) Higher Potential Returns: Since many equity markets of countries outside of the US outperformed the S&P 500 Index and other domestic indices in the long-term, we increase potential long-term returns of our client portfolios.
2) Lower Risks: We lower volatility of our client portfolios for two reasons:
3) ETFs: As mentioned, using ETFs as the building blocks of our portfolios gives us several advantages over other investment instruments that are commonly used for global diversification:
4) Long-term Horizon: By attracting investors with long-term investment horizons, we are able to benefit from investing in equity markets of countries that trade at discounts to their long-term average valuations due to various political and economic crises, hard economic times, social instability and other challenges. Managers that have shorter time horizons are unable of taking these opportunities as the crises take time to get resolved.
1) Higher Potential Returns: Since many equity markets of countries outside of the US outperformed the S&P 500 Index and other domestic indices in the long-term, we increase potential long-term returns of our client portfolios.
2) Lower Risks: We lower volatility of our client portfolios for two reasons:
- The main benefit of the global diversification is the fact that returns of international markets are not perfectly correlated with returns of domestic equity indices. When some markets decrease in value, prices of others increase leading to lower volatility of our clients’ portfolios compared to the volatility of individual equity markets.
- Since we buy indices that trade at lower prices compared to history, their downside is limited.
3) ETFs: As mentioned, using ETFs as the building blocks of our portfolios gives us several advantages over other investment instruments that are commonly used for global diversification:
- ETF portfolios are better diversified and less risky than many active stock picking funds.
- ETF portfolios have better exposure to small and medium countries than broad global equity indices.
- Number of single-country ETFs exceeds that of closed-end country funds.
4) Long-term Horizon: By attracting investors with long-term investment horizons, we are able to benefit from investing in equity markets of countries that trade at discounts to their long-term average valuations due to various political and economic crises, hard economic times, social instability and other challenges. Managers that have shorter time horizons are unable of taking these opportunities as the crises take time to get resolved.