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Nottinghill Investment Advisers
Nottinghill Investment Advisers
Nottinghill Investment Advisers Nottinghill Investment Advisers
Nottinghill Investment Advisers
Nottinghill Investment Advisers
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Southampton Square
7414 Jager Court
Cincinnati, OH 45230-4344

Tel: (513) 624-3000
Toll Free: (877) 624-3001
Fax: (513) 624-3003

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All individual or institutional investors who have spent any length of time investing in equities or directing others to invest in equities can attest to the emotional extremes. They are caused by the relentless cyclicality of the equity markets and the frequent impact of the unforeseeable. Successful investors cope with these extremes by ensuring that, over time, boldness and certainty give way to humility and the desire for an appropriate control of investment risk. In fact, there is no one technique or investment style for all seasons, and the control of investment risk is very important.

The control of investment risk is a key aspect of Nottinghill's Value Plus Approach to investing. The Value Plus Approach is four highly effective investment strategies, sets of quantitative disciplines designed to produce four distinct levels of expected investment return at four distinct levels of expected investment risk.

Of course, knowing what an investment strategy is likely to provide is an important first step in the process, but only a first step. The Value Plus Approach also encompasses certain Fundamental Beliefs that guide the investor along the path. These Beliefs are:

  • A positive rate of total investment return, net of inflation, taxes if applicable, and investment expenses

  • Controlled investment return volatility

Knowing where to go is an important first step in the process, but only a first step. The Value Plus Approach also encompasses certain Fundamental Beliefs that guide the investor along the path. These Beliefs are:

  • Diversification and discipline are the key elements of long-term investment success

    The grand macro trends in the economy and the financial markets encompass many variables, and are basically unforecastable. The solution is always to invest portfolio assets across a variety of promising asset classes and securities that do not all move together in price and/or are not impacted by the same risks. Then, stay focused and stay the course.

  • Equities in general and Value equities in particular should be the cornerstone of any
    portfolio

    The virtues of ownership are demonstrated persuasively by the historical record of publicly traded equities. Over the 1960-2015 period, the broadly based S&P 500 Index provided an annualized investment return of 9.83%, compared to 6.73% for a five-year Treasury note and 4.75% for 90-day Treasury bills. And, a focus upon equities that are out-of-favor and inexpensive in terms of earnings, dividends, and underlying assets is more rewarding than trying to select superior long-term growers. Value investing has a significant 1960-2015 performance advantage of 3.14% per year over Growth investing.

  • Indexed approaches often compete very effectively with the active management of both
    equities and fixed income securities, and should be represented in the overall portfolio

    The data here also are persuasive. Over the 2002-2011 period, only 20% of all active, domestic equity mutual fund managers and only 11% of all active, domestic bond mutual fund managers outperformed their passive benchmarks. The index funds/Exchange-Traded Funds that invest in accordance with those passive benchmarks, therefore, are formidable competitors of active management strategies. Indexed approaches at the very least are important portfolio allies.

  • Investment expenses should be kept under strict control, and should be transparent

    If a lack of discipline is not the single largest impediment to investment success, then high management fees and transaction costs are. At year-end 2011, the average expense ratio for all actively managed, domestic mutual funds was 1.35% of total assets, a figure that does not include transaction costs. Investment expenses compound over time, and can have a significant impact upon investment returns. Expenses should be kept under strict control, and should be disclosed fully.

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The Value Plus Equity Strategy. The Enhanced Index Equity Strategy. Total Portfolio Management. Indexed Total Portfolio Management. They constitute Nottinghill’s Value Plus Approach to investing. Each satisfies a specific investor need. The all-important details are provided in the pages to follow.

 

 

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