Most investors share a common goal-to own an investment portfolio that offers the greatest likelihood of achieving or exceeding their investment objectives while managing exposure to potential loss.
Risk tends to vary in direct proportion to return potential. The more risk an investor is willing take, the greater the potential returns, and the greater the potential for short-term loss. Risk management is a process of reducing the likelihood of failure.
Our evaluation of academic research and fiduciary standards of care suggests that a disciplined asset allocation strategy is one of the more reliable ways to manage risk and generate returns. We place a heavy emphasis on finding the right mix of investment assets-one that provides a high probability of meeting your needs, without taking unnecessary risk.
Through diversification, we attempt to eliminate as much risk as possible for any given range of expected returns by combining different asset classes, investment styles, and managers. Proper diversification can effectively smooth the ride by reducing overall portfolio volatility.