At Venovate Advisors we build core portfolios for our clients based on the principles of Asset Class Investing. 

Grounded in modern portfolio theory and the research of leading economists such as Nobel laureates Harry Markowitz and Eugene Fama, Asset Class Investing recognizes that you can’t beat the market on a risk-adjusted basis. 

Instead of chasing returns, we focus on reaching your goals by designing portfolios that let the market work for you without taking excess risk. 

Our philosophy has three basic principles:

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1. Efficiency

Markets are efficient. This means that, at any given moment, the prices of publicly traded securities are fair.

Any long-term differences in average portfolio returns are the result of differences in average risk.

In other words: it is possible to outperform markets, but you can’t do it without taking additional risk.

The objective is to reach your goals with an acceptable level of risk.  

2. Risk

Some risks are worth taking. For example, more than 50 years of data and research indicate that stocks are riskier than bonds, but they also have higher expected returns. 

Small cap and value stocks have outperformed other equities over time because the market discounts their prices to reflect their higher risk.

This discount gives them greater upside potential in return for the additional risk. 

3. Diversification

Diversification helps control the risks not worth taking. 

A carefully constructed global portfolio spanning asset classes, fixed income maturities, and geographical regions can capture the factors that generate returns while reducing those risks that usually go unrewarded.  

Diversification will not eliminate the risk of market loss, but it can reduce the risk of individual securities while capturing returns attributable to broad economic forces. 

 

No advisor can guarantee success, but we believe Asset Class Investing is a prudent, strategic approach based on sound academic research. 

It is not about beating the market. It is designed to help you understand the risks required to reach your goals and build a portfolio you can stick with in good times and bad. 

It combines the latest thinking in economics and investing with Professor Meir Statman’s in-depth studies of investor psychology and behavior. 

This disciplined, structured approach helps protect you against the common behavioral mistakes that are the worst enemy of your long-term financial goals. 

 

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