The Optimal Mix of Investments
The Buckingham Strategic Partners’ Investment Policy Committee (IPC) helps firms filter the investment universe. The IPC applies a series of stringent checks to narrow the investment landscape — choosing only managers with systematic, rules-based and transparent practices. The IPC recommends primarily using mutual funds and ETFs, along with individual bonds, to build your portfolio. Utilizing these vehicles may be an inexpensive way to gain ownership in thousands of companies and significantly reduce the potential impact of bad news from any one in particular.
Yet, investment selection is never easy. With more than 20,000 funds to choose from, knowing the best option can feel quite daunting. Fortunately, research shows how to better analyze and filter fund managers and their strategies to a more optimal set for your portfolio.
The Evidence-Driven Investing™ Selection Process
This selection process uses a methodology to identify investments that best capture the characteristics of our portfolio strategy. Through a multi-layered approach—including evaluating cost and tax-efficiency—it carefully narrows the investment options for your portfolio.
Eliminate any funds with hidden loads or 12b-1 marketing fees.
Include only funds that are broadly diversified across stock sectors and geographic regions.
Look for funds that implement academically sound investment strategies.
Engage the fund managers in extensive conversations to develop a deep understanding of their teams, best practices and processes.
Look for funds that are most effective and consistent at capturing their targeted exposures relative to the costs they charge.
Evaluate the tradability of the fund or ETF to ensure resilience in volatile markets.
Trusted Fund Managers
The IPC applies a similar process across all stocks, bonds and alternatives in order to pick the right fund, ETF and Separately Managed Account providers available for your portfolio. This is not a one-time approach. The IPC continually re-evaluates investment providers on an ongoing basis, reviewing whether selections are right for you both today and tomorrow.
Systematic. Rules-based. Cost Effective. Transparent. Highly-tradeable. Consistent.
Dive deeper into our investment implementations:
Company logos are property of the respective owners, and the use of these names does not imply endorsement by the owner.
For illustrative purposes only. Each portfolio starts with $1 milliion and grows by 7 percent per year, less the assumed fee. The fee is applied annually at the rate stated. One percent was chosen as that is roughly the average prospectus net expense ratio of all mutual funds and ETFs available in Morningstar as of December 31, 2022. 0.30 percent was used as the types of equity portfolios that Buckingham typically designs for clients typically cost 0.30 percent or less.
Removing Unwanted Risk in Manager Selection
Many individuals and professional investors believe they can pick the next big winner—effectively speculating that the current price of a stock is wrong and that they have better insight into the potential of a company than other investors. However, evidence just doesn’t support that approach.
According to Standard & Poor’s SPIVA® U.S. Scorecard, over a 10-year period only 8% of U.S. stock money managers were able to beat the benchmark. That’s before considering any taxes! Your odds at many casino games are higher.
That’s why the Evidence-Driven Investing™ approach builds portfolios with the idea that a company’s current price is the best estimate of its value. Decades of research has shown that using systematic, rules-based strategies gives you the best likelihood of achieving your financial goals.
Source: S&P Dow Jones Indices LLC, S&P Indices Versus Active Funds (SPIVA®) U.S. Scorecard. Mid-Year 2022. Data is percentages of outperformance over last 10-years ending June 30, 2022. U.S. Stocks represents the All Domestic Funds category. International Stocks represents the International Funds category. Emerging Markets Stocks represents the Emerging Markets funds category. Intermediate U.S. Government Bonds represents the Government Intermediate Funds category.
|What You Think When You Hear “Fixed-Income”
|What We’re Actually Using
|“Traditional” Broker Model
|Bonds sold from inventory
|Bonds may have significant markups
|No ability to mark up bonds
|Put dealers into competition
Real estate strategies attempt to capture the debt, rents and price appreciation of commercial real estate across the world.
Private lending strategies leverage technological advancements to offer competitive financing to consumers, small businesses and middle-market companies.
Reinsurance strategies provide predetermined amounts of coverage to reinsurance companies covering against spikes in losses associated with natural disasters such as hurricanes, earthquakes, fires and typhoons.
Style Premia strategies look to capture the difference in return between certain types of stocks, bonds, commodities and currencies in a rules-based, systematic manner.
Unbiased & Disciplined—Designed for You
Your wealth is important, so there’s never a one-size-fits-all approach. Work with your advisor to find the right investments that are best suited to the strategy you outline together.
Sometimes investments can seem complicated, but with an Evidence-Driven Investing™ approach, a portfolio can be developed that you can stick with through all kinds of market cycles.
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