Updated: Mar 30
RiskSmart Investing: Portfolio Efficiency
RiskSmart investors focus on portfolio efficiency. At WealthFactor we believe there are three main things investors should avoid when building portfolios; concentration, layers, and complexity. Thanks to passive investing, building a diverse portfolio of investments is now free or nearly free.
Despite this industry trend, many investors still look to expensive advisors with sales and relationship backgrounds to provide them with investment expertise. The average portfolio built with funds that invest in stocks have thousands of underlying companies. While this certainly avoids concentration risk, it will likely result in a before fee return that is at best equal with the market. Owning 15 funds, each with hundreds of positions isn't likely adding anything more than layers, complexity and expensives The idea that an average investor or advisor should try to pick stocks or time investments does not make sense. Hedge funds and other institutions deploy immense resources.
It's common to see an investment advisor try to pick and time funds that pick and time securities. Each layer increases costs and complexity and each layer likely reduces the probability of overall success. RiskSmart Investing is designed to avoid picking and timing investments whenever possible.
At WealthFactor we use systems and repeatable process as much as we can to avoid picking, timing and layers. Through a discipline simplicity, or risk smart investment approach focused on the tax and portfolio efficiency seeks to maximize the probability of successful investment outcomes.
About WealthFactor: A Lake Oswego based investment adviser and wealth manager serving local high net worth and ultra-high net worth investors. Founded on the idea that high fees force unnecessary risks when providing investment advice. By leveraging the investment methodologies of the largest passive and rules-based asset managers, WealthFactor seeks to pass on the benefits that efficiency provides through financial technology on to its clients. WealthFactor offers custom investment advice services conveniently through separately managed accounts in each investor’s name. For more information visit www.wealth-factor.com.
About Bill Woodruff: WealthFactor’s founder has been investing in publicly traded financial markets for over 20 years. His career includes founding an alternative investment manager, launching and managing a mutual fund and serving as a managing director of a publicly traded investment manager. With over a decade of experience serving high net worth investors Bill skillsets uniquely blend an understanding of investor needs with an extensive financial markets and investing background.