The Investment Process

Asset Allocation

Our typical client account is invested primarily in a portfolio of carefully selected mutual funds. No-load mutual funds give us access to some of the best investment managers available, and allow us to invest client assets across multiple asset categories. We devote much of our time to identifying the best fund managers available, and we believe the level of due diligence we employ, described in more detail below, sets us apart from other advisors. Most of our fund managers run fairly concentrated value-oriented portfolios, which we believe is the best way to earn excess returns. In an effort to optimize the balance between this concentration and diversification, we allocate clients assets across multiple funds in diverse asset categories such as bonds, small U.S. stocks, large U.S. stocks and international stocks. The initial allocation to each category will be determined by having an in-depth discussion regarding each client's time horizon, income needs, tolerance for risk and investment objectives. We may make adjustments to this allocation based upon our determination of the relative attractiveness of each asset class. [Back to top.]

Mutual Fund Selection Process

Face-to-face meetings set us apart – we travel extensively to meet the fund managers and research analysts at funds we consider for investment, and follow up with regular calls and visits. What we are looking for are intelligent, rational investment managers who invest according to the principles outlined in our Investment Philosophy.

We focus on process as much as results – we require a thorough understanding of how our managers select investments, and we are not distracted by funds that are currently "hot."

We prefer mutual funds that are significant investors in their own funds alongside their clients.

As a result of our approach we generally end up working with "boutique" fund firms that only invest according to a single investment philosophy that is aligned with ours – our managers typically don't market a wide variety of funds in an attempt to cater to a wide number of investors.

Specific considerations in the selection of investment companies are:

• Past performance in a variety of markets
• Transaction charges and annual expense ratios
• Consistency in implementing the stated investment objective
• Firm culture
• Quality of back-office skills
• Fund turnover
• Fund cash flow
• Access to the portfolio manager
• Tenure of the portfolio manager
• Ownership of the management firm [Back to top.]