Investment Philosophy

Our overall investment strategy relies on the hierarchy of returns. At the bottom of the return/risk pyramid are the safer investments, including cash/stable value funds, whose returns generally match or exceed inflation. The middle level of the pyramid is filled with bonds and the top of the pyramid is occupied by equities. Although there are short-term deviations from a return perspective, over long time horizons higher returns will be provided by equities.

We at Yentis and Associates, Inc. like to have a reasonable mix between value and growth styles, but will make appropriate adjustments based on our economic perspective of the markets. For other asset classes, we have developed longer term perspectives on return. International investments, for example, gain much of their return volatility through changes in currencies.

We do not believe anyone is capable of consistently making accurate predictions on interest rates or currencies, but we do insist that it is important to watch trends in both to make short-term market changes in our asset allocation models. Our overriding philosophy: take a strong position from a strategic perspective and generally make small changes from a tactical one.

Relative Versus Absolute

When evaluating the historic performance of an investment we use both absolute and relative returns. The absolute returns are viewed over the appropriate time horizon and are used in our estimates.

The relative performance is vital as we measure how a fund is competing with its peers. It is also important to examine relative performance because there may be style drift. In addition, we look at consistency versus the fund’s benchmark, noting that one extremely strong year might skew results.