We define successful investment management as helping our clients determine and meet their investment and income objectives. Our investment philosophy consists of seven areas of concern:
We believe that the application of our investment philosophy will add value and increase the likelihood that our clients will achieve their financial goals.
Asset allocation is our first area of concern, since it is the dominant factor in determining total portfolio return and safety. Studies have shown that asset allocation decisions account for a much greater proportion of total return than either security selection or market timing. Therefore, the overwhelming determinant of the success of an investment strategy is how the portfolio is divided among the various asset classes, such as bonds, equities, cash, commodities, real estate, alternatives, etc.
Castle Investment Advisors makes use of our specifically chosen managers who invest in distinct sectors of the markets. Specialists who adhere to a predefined investment discipline, such as large company growth managers, have an opportunity to hone their approaches and to anticipate changes within their areas of the market. The use of specialist managers combined with specific securities chosen by our own investment team is consistent with our view on spreading investment risk across various asset classes. We select highly ranked managers for the various sectors and styles in order to diversify portfolios and take advantage of economic trends. This coverage is continually adjusted to reflect current conditions and outlook.
We work very hard to hold down transaction costs and expense ratios for our clients. We are always watching individual portfolio managers to make sure we use the best managers with the lowest fee schedules. As a fee-only firm, we do not use stockbrokers, and we are compensated only by our clients. By using our larger buying power, we can negotiate lower fees and costs for all of our clients.
Continuous Portfolio Management
Portfolio management is a continuous process. Once our clients' needs are defined, a plan is developed, a strategy is implemented and confirmation and reevaluation of the portfolio is continual. There are two critical components of this process. First, the portfolio is rebalanced regularly to assure that the mix of assets defined to achieve goals is constant. Rebalancing reduces risk and keeps the investment plan on the right course. Second, we constantly "rehire" the managers that we allow to manage clients' portfolios. Each manager is continually monitored and is subject to replacement should he or she deviate from their stated philosophy of process or fail to achieve stated goals.
Taxes matter, and for investors with taxable assets, failing to analyze tax implications can significantly impede the realization of their financial objectives. Research and experience has led us to take a total portfolio approach using multiple asset classes in a globally diversified manner. We believe that focusing on tax management is an important aspect of ongoing portfolio management. Wise tax decisions are important for our clients, their children, and their grandchildren.
Return and Risk Expectations
Castle Investment Advisors' investment process is designed to provide value to our clients' financial journeys. Our goal is that our separate managers, mutual funds, and investment portfolios will outperform their market indices, after fees, and to be well above the median returns of their peer groups. From a risk perspective, we expect the returns of our separate managers, mutual funds, and investment portfolios to have risk ratings that are less than those of their peer group averages.
These components of Castle Investment Advisors' investment philosophy are the result of decades of experience and research in serving clients just like you. The investment philosophy to which we adhere is, in fact, the day to day disciplined routine by which every client is served.