Investment Philosophy

Our investment process is guided by a hundred years of empirical data, decades of academic research by renowned economists and the practices of leading institutional investors.

The best way to own common stocks is through an index fund that charges minimal fees. Those following this path are sure to beat the net results… delivered by the great majority of investment professionals
Beta appeals to the intellect, alpha is emotional. Everybody has the ability to find beta; nearly no one has the ability to find alpha. Beta is a humble approach to markets, a more honest recognition of the limits of your talent and personality type. Alpha ignores the probabilities, assuming they will beat those odds to obtain the holy grail.
Investment management is a commodity whose market price has dropped close to zero, whereas the advice and judgment of a good financial planner can do wonders for your net worth.

Investment philosophy

Our core beliefs:

Risk and return are related
There is good risk and bad risk. Higher exposure to the right risk factors or premia leads to higher expected returns but is no guarantee of them. Risk is the premium investors pay for the expectation of a greater return.
The capital markets work
The prices of securities reflect the expectations of all market participants. The capital markets are far from perfect, but they do a good job of fairly pricing all available information and investor expectations about publicly traded securities.
Asset allocation and portfolio structure drive portfolio return
The most important factor determining the level of risk and variability of return in a portfolio is asset allocation.
Consistent outperformance is rare
Economic uncertainties, random market movements, and the rise and fall of individual companies mean it is extremely difficult for anyone – including professional fund managers – to beat the market in the long term. There is a significant body of research to suggest that outperformance by most fund managers is down to luck rather than skill.
Costs matter
Costs reduce an investor’s net return and represent a hurdle for a fund. Before a fund can outperform, it must first add enough value to cover its costs. Sadly, the vast majority of professional fund managers fail to add value and high cost is a strong predictor of poor fund performance.
Investor behaviour is a key determinant of long-term outcome
All too often, investors let their emotions get the better of them with dire consequences for investment returns. We expect that planners working with Betafolio add significant value by helping clients maintain a disciplined approach, especially in extreme market conditions.
Diversification is essential
Diversification is the principle of spreading your investment risk around. Our investment portfolios hold the shares and bonds of many companies and governments in many countries around the world.
Rebalancing should be driven by market movements
Unnecessary portfolio rebalancing, often arbitrarily timed around client review meetings, damages investment returns. Rebalancing should be driven by market movements to ensure portfolios remain in line with risk parameters and return objectives.