At The Capital Company, we are huge proponents of evidence-based investing. The above-mentioned factors that influence returns are well documented in markets around the world and are persistent across different time periods. While past performance is not necessarily an indication of future performance in any given year, we can endeavor to increase the expected return of a low-cost, already well-diversified portfolio by tilting it more towards these factors.
We manage investment risks by using the combined powers of diversification and asset allocation.
Diversification is a means to dampen avoidable, concentrated risks. By spreading your holdings widely and globally, if some of them are affected by a concentrated risk, you can offset the damage done with plenty of other unaffected holdings. While some risks can be diversified away, market risk however remains and is expected to enhance your long-term returns if you build them into your total portfolio, and if you stay the course with them over time.
Asset allocation is determined by the investor’s specific goals and times frames, and guided by his or her risk tolerance and capacity. By blending a customized mix of riskier and less risky asset classes, we seek to build wealth toward our clients’ personal financial goals while fine-tuning the risks involved.