Investment Tools and Model Philosophy

Charting Your Course

At Portfolio Research, we believe that educated, knowledgeable consumers should have the opportunity to chart the course to their financial goals in a way that is efficient, affordable and easy to understand. In fact, that’s why we created Portfolio Research – so that investors can control their risk and manage their wealth without paying unnecessary or costly fees.

Defining Principles

Our philosophy is founded on academic research in finance, mathematics, and economics. Planning for uncertainty and building portfolios that do well in varied market conditions characterize our model and management tools. We use advanced mathematics and computer science to craft efficient model portfolios based on measurements of market risk and return correlations. Our philosophy and tools emphasizes diversification, market efficiency, and low costs.

Diversification

When a portfolio is efficient, diversification is the only way to lower risk without lowering return. By combining two or more securities with equivalent risk into a portfolio, an investor can achieve the same expected return, but with less risk. The degree to which an investor can lower risk or increase return through diversification depends on the correlation and volatility of the assets.

Efficient Markets

The crowd of intelligent investors competing for returns in the marketplace drives prices to a value that is fair. When prices are fair, an investor must have information that the rest of the market does not have to outperform the market. Various academic studies have shown that even professional investors don’t have informational supremacy. Over time, the vast majority of managers that attempt to beat the market fail to do so. After accounting for costs, the investor loses. Because markets are nearly efficient, we do not believe that paying for active management is a worthy approach for individual investors, particularly for savvy investors who want more control of risk and wealth management.

Reasonable Costs

Fees lower the return rate of investments which can delay objectives such as retirement. For an efficient portfolio, the only way to increase investment returns without increasing risk is to lower the fees paid. To increase the return to what it was before costs were applied, an investor would have to take on more risk.

Summary

Our philosophy and tools are founded on our beliefs about maximizing diversification benefits, market efficiency, and minimizing investment costs. We use our own proprietary model to construct asset allocations that achieve the highest expected return for the risk taken. Our tools can help you implement a low cost diciplined approach to investing.