All individual or institutional investors who invest in financial assets can attest to the emotional extremes. Successful investors cope with these extremes by ensuring that, over time, boldness and certainty give way to humility, discipline, and the realization that there is no one investment style for all seasons.
Our Yield Plus Approach to investing consists of several highly effective investment strategies, all based upon four Fundamental Beliefs:
- 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 basically are 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. Then, stay focused and stay the course.
- Publicly traded equities should be the cornerstone of any portfolio
The virtues of owning businesses are demonstrated persuasively by the historical record of publicly traded equities. And, a focus on equities that are out-of-favor and inexpensive in terms of corporate earnings, dividends, and underlying assets generally is more rewarding than trying to select superior long-term growers. However, the Growth style of equity investing does deserve a place in the overall portfolio.
- 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 are persuasive. The index funds/Exchange-Traded Funds that are invested in accordance with passive equity and fixed income benchmarks are formidable competitors of active portfolio 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. Investment expenses compound over time, and can have a significant impact on investment returns. Expenses should be kept under strict control, and should be disclosed fully.
* * * * * * * * * * * * *
Diversification and discipline. Publicly traded equities. Indexed approaches as portfolio allies. Expenses that are controlled and fully disclosed. The four Fundamental Beliefs underlying Nottinghill’s Yield Plus Approach. Fundamental Beliefs to guide the investor along the path to investment success.