For many years, the Ivy League university endowments at Harvard and Yale have outperformed the indexes by using the “endowment model” which involves allocating a portion of assets to categories other than the traditional stocks, bonds, and cash, and use of institutional style money managers.1 It’s our opinion that this shows how massive diversification across asset classes, equity styles, foreign markets and investment philosophies can be a significant lever in increasing risk adjusted returns.
Precious metals, farm commodities, timber, oil and gas are a few examples, but there are many other investment opportunities that can be used to build a robust portfolio. Until recently, diversification across many dimensions was unattainable or unattractive for most investors because of the lower liquidity, lower transparency, higher fees and larger account minimums (often times well over a million dollars) typically associated with institutional style money management.

The Benefit Of The Endowment Model

Between 1985 and 2008 Harvard’s endowment returned 15.23% and Yale’s earned an even better 16.62%.2 In comparison, during this same period, the S&P 500 grew by about 12% on average. Both these track records and a vast body of research indicate that massive diversification, essentially investing more similarly to the big endowments, can improve the return earned by individual investors.3

Our mission is to break down the barriers that commonly prevented individual clients from investing similarly to the big endowments.

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An Example Of A Well Diversified Portfolio

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Customization, Transparency, and Tax Efficiency

Technology has changed the way people do just about everything. For example vinyl records, Polaroid cameras, pay telephones, and typewriters have all suffered technological obsolescence. Now technology is changing the way people invest by allowing individuals to pursue the strategies the wealthy and large institutions have used for decades. Now, you can invest according to the endowment principles using institutional money managers while employing separately managed accounts (SMAs) for a cost lower than many mutual funds. Many of the advantages of this approach over mutual funds and other pooled retail investment vehicles are explained below.

 

Seize The Opportunity, Upgrade To SMAs.

You deserve customization, transparency, and tax efficiency typically available only to multi-million dollar accounts.

The Client Experience

Our five step process in designing your investment portfolio provides a disciplined approach to both attain your gaols and create the confidence required for you to adhere to your plan through market cycles. We are here to help you in your pursuit of financial security and eventual success.

  1. Needs Analysis: We learn about your current assets, anticipated expenses, goals, and risk preferences.
  2. Portfolio Engineering: We design a diversified asset allocation of institutional money managers that is customized to your goals.
  3. Securities Selection: Professional money managers with independent strategies select your securities.
  4. Monitoring and Rebalancing: We aim to keep your current portfolio consistent with your target asset allocation.
  5. Ongoing Communication: Our job is to understand changes to your needs, goals, desires, and priorities and to make appropriate modifications when needed.

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1. Singh, Manoj. “How To Invest Like An Endowment.” Investopedia, Mar 30, 2012.

http://www.investopedia.com/articles/financial-theory/09/ivy-league-endowments-money-management.asp

2. http://www.investopedia.com/articles/financial-theory/09/ivy-league-endowments-money-management.asp

3. Goetzmann, William N. and Kumar, Alok, Equity Portfolio Diversification, Review of Finance (2008) 457.

Welcome To A Modern Wealth Management Experience.

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