Our Investment Philosophy is centered on the foundations of financial science. By utilizing the advancements of leading financial and economic research, we believe that you can invest more efficiently, accomplish your goals faster, and have a better overall investment experience.
Our approach is based on an enduring belief in the power and efficiency of the markets. Research has shown there is no advantage in trying to guess the winners and losers in the markets, or trying to time the markets. Decades of Nobel Prize winning research has shown us that rather than trying to out-guess the markets, we can achieve higher expected returns by focusing on dimensions of the market that have been proven to out-perform over time.
These foundations are what allow our clients to achieve a better investment experience and have more peace of mind as they work towards their financial goals.
VCM’s custom portfolios, backed by leading academic research, are centered on the following ten principles:
Over the long term, the market is an effective information-processing machine. Millions of market participants buy and sell securities every day and the real-time information they bring helps set prices. This means competition is stiff and trying to outguess market prices is difficult for anyone, even professional money managers. Rather than basing an investment strategy on trying to find securities that are priced “incorrectly,” investors can instead rely on the information in market prices to help build their portfolios.
Diversification can have the important benefit of lowering the risk and volatility of a portfolio.
Stocks are expected outperform bonds over the long-term.
Small cap stocks are expected to outperform large cap stock over the long-term. From 1928 to 2017, large cap stocks have returned 9.87% compounded annually. During that same time period, small cap stocks returned 12.2%.
Value stocks are expected to outperform growth over the long-term. From 1928 to 2017, value stocks in the U.S. market returned 12.75%, whereas growth stocks in that same time period returned 9.21%. The best performer overall in the overall U.S. market from 1928 to 2017 was Small Cap Value, which returned an annualized 13.5%.
Stocks with a higher profitability will outperform over the long-term. From 1964 to 2017, stocks with relatively high profitability returned 12.46%, whereas stocks with relatively low profitability returned 8.35%.
Global diversification among various asset classes can assist to reduce risk, lower volatility, and increase returns of a portfolio.
Since there are so many factors we cannot control with investing, it is important to focus our efforts on what we can control. This includes: investment fees and expenses, opportunity cost, and most importantly, tax cost. By lowering the overall cost, we can increase returns and accomplish your goals faster and more efficiently.
We believe an investment plan must be tailored to your unique situation. Your risk tolerance, goals, needs, financial situation, your career, & more, all must be considered when designing the right portfolio for you. That is why VCM always customizes our portfolios to our clients.
Research has shown that the markets reward investors who create a plan and stay disciplined over the long-term.
By using these foundations and integrating them with your individual needs, goals, and risk tolerance, we can build a better, more efficient portfolio for you.
Dimensional Fund Advisors (DFA)
While we work with many different investment companies, there is one company that closely aligns with VCM’s Investment Philosophy. That company is Dimensional Fund Advisors. For decades, Dimensional has added value to their clients through ground-breaking academic research and long-standing commitment to academic research that is at the center of their core values.
VCM does not receive any compensation from Dimensional Fund Advisors.