Our investment philosophy simplifies the daunting task of investing. This is critical because the vast majority of participants feel unprepared to direct their own investments.  We assist and enable participants to make rational investment selections which can give them confidence to invest in the plan.  We help them optimize the risk/return relationship of their portfolio to meet appropriate goals over the long term.

To accomplish this, we have designed globally diversified custom asset allocations based on target retirement dates that make the investment process understandable.  In addition, for those participants who feel competent to implement their own investment strategy, we offer a slate of individual mutual funds as well as a self-directed brokerage option.

Investment Principles

Basic financial theory suggests that all investors are risk averse. The only acceptable risks are those that are likely to be adequately compensated for by portfolio returns.

This is only true to some degree; some clients are risk averse while others are risk/thrill seeking.  Most are unsure of their risk tolerance and find that it changes depending on market conditions - risk averse in down markets and risk seeking in climbing markets.  The lineup of funds that we provide allows investors to make their own decisions about how much risk they want to take.

Diversification is perhaps the most important principle when investing. By spreading assets across different kinds of investments, it is possible to reduce risk and potentially increase returns. We use funds that are very diversified and provide allocations that allow diversification geographically (Domestic vs. International), company size (Large Cap vs. Small Cap), credit risk (Treasury vs. other bonds) and duration (Shorter vs. Longer Term bonds).

Simplicity is key. Investing can be very complex, so we have made many of the decisions relatively easy for most participants by offering enough funds to create a diversified portfolio, but not so many funds that participants are overwhelmed by choice.

To that end we have created the Acropolis Target Retirement Allocations (ATRAs), which are offered at no additional cost. These models select an appropriate asset allocation based on the amount of time until retirement, automatically reduce risk as time passes and rebalance quarterly. The participant essentially makes one investment decision based on their expected retirement date. 

Markets work.  The ever changing flow of the investment markets factor in the extensive amount of information available, investor expectations and human behavior driving prices to a fair value.

Predicting the market consistently is virtually impossible.  In fact, according to research done by Dalbar, Inc. attempts at market timing greatly contribute to why the average investor’s portfolio significantly underperforms the market.

The portfolio as a whole is more important than the individual fund.  The appropriate allocation of capital among asset classes (stocks, bonds, cash, etc.) will have far more influence on long-term portfolio results than the selection of individual funds. 

Modern Portfolio Theory, as recognized by the 1990 Nobel Prize, is the primary influence driving the portfolio structure.  For every risk level, there exists an optimal combination of asset classes that will maximize returns.  A diverse set of asset classes minimizes risk.  The proportionality of the mix of asset classes will determine the long-term risk and return characteristics of the portfolio as a whole.  Portfolio risk can be decreased by increasing diversification of the portfolio and by lowering the correlation of market behavior among the asset classes selected.