Our Approach
A simple, transparent and liquid framework for investing through the full cycle.
Most portfolios are built to be diversified on average. We believe a portfolio should be diversified at the right time. The economic environment drives most of the risk in markets, sectors come second, and individual securities last. So we start with the environment.
The environment comes first
We classify every period since 1947 by its growth and inflation into one of nine economic environments. Each environment has rewarded a different mix of assets, and each has tended to persist long enough to act on. The strategy holds the portfolio that has historically suited the current environment and changes only when the environment changes.
Two overlays for the extremes
Bubble Model. A quantitative measure of speculative excess that reduces exposure to assets whose prices have moved well beyond their history.
Bear market trigger. A multi-factor signal that lowers equity exposure during sustained declines, with the aim of capturing equity market returns over time with lower volatility and smaller drawdowns.
What we hold
U.S. equities, U.S. Treasuries and cash. Nothing private, nothing illiquid, no leverage. Positions are held through low-cost index instruments so investors can see exactly what they own at any time.
Why simple
Over ten years, fewer than one in ten active managers earns back even their own expenses. We do not try to pick securities or time short-term moves. We do a small number of things that history supports, and we do them consistently.
"Being diversified on average should not be the goal. Being diversified at the right time should be."
Britt Harris