As an investment advisor and asset manager that focuses on active asset management, we are often dumbfounded by the constant messaging of passive firms saying investors should use index products only. Their conventional wisdom is that investors should use passive funds because active managers do not outperform and they are expensive. We find many examples of active funds outperforming passive. Yes, some managers do print terrible results but our goal is to avoid those bad situations.
The Laurentide Portfolios currently utilize 16 active mutual funds. Mutual funds are selected using our research process which strives to understand, the People, the Parent Company, Portfolio Construction and How Ideas Are Generated. Prudent research gives us a basis to identify funds that deliver consistent results over a long period. We know cost matters and paying for professional management is OK as long as the results are superior. We prefer to say "excess net return above the benchmark matters."
We rank and monitor mutual funds versus their primary prospectus benchmark, the measure of success for each fund and the teams that manage it. How they rank versus this benchmark is their measure of professional success.
More Dollars Over Time (not guaranteed)
Our investment process utilizes active management and strives to achieve a higher return over the benchmark, higher returns equal higher compounding. Large asset pools such as pensions, corporate cash or endowments prefer active management and they hire a staff and best in class assets managers to ensure success. They do not believe in the passive idea to any great extent because they value portfolios built on economic value.
We think all investors should strive to receive their best advice and a higher rate of return. Your adviser may add value through advice and be friendly but are they firing on all cylinders by delivering superior investment results. What do superior results ultimately translate to? Better funding for college, a sustainable living standard in retirement or the ability to be charitable to family or social interests? So really how much is that manager costing you in missed opportunity?
Quality advises followed by excess net return above the benchmark is a pretty good situation. We are happy to have a conversation. Contact information at >. LaurentideAdvisory.com
Author: John Kirby