Minimizing Investment Risk without Sacrificing Investment Returns
Having a well-diversified portfolio that is not too heavily invested in any one area is key to reducing risk and maximizing return. That’s why Summit Financial Partners believe so heavily in Dimensional Funds.
Dimensional Funds are institutional class mutual funds that can only be purchased through approved Fee-Only advisors. They have low expense ratios and are efficiently managed.
As a company approved to use Dimensional Fund Advisor Funds, or DFA funds, Summit Financial Partners can provide impactful investment management and asset management, so that you can own companies of all sizes, all over the world.
We also maintain your diversified portfolio. And we rebalance it. Many investors are afraid to do that. Because of our disciplined rebalancing, you’re allowed to capture much more of the market’s return.
Investment Management That Works For You
This form of investment management differs from the more common practice of active management where analysts try to predict which stocks will perform the best at any given point in time. They are simply trying to predict the future based upon the same information that all market participants have access to.
On the other hand, Summit Financial Partners draws information about expected returns from the market itself – letting the collective knowledge of its millions of buyers and sellers set security prices.
The Beneficial Advantage
When we let markets do what they do best – drive information into prices – it frees us to spend time where we believe we have an advantage, namely in how we interpret the research, how we design and manage portfolios, and how we service our clients.
By having a greater level of diversification, by owning thousands of stocks instead of a handful, by utilizing the right research, we help provide protection for your overall wealth if a few companies suffer a permanent decline in value.
The Philosophy of Dimensional Fund Advisors
- Markets Work Stocks generally trade at fair value because market participants easily know all publicly known information.
- Investing Versus Speculating Chasing returns rarely builds portfolios. However, we believe in investing money in well thought out portfolios, which include stocks from large and small companies based all over the world. We also believe the appropriate amount of bonds will build wealth over time.
- Risk Can Become Return It is a rare occurrence when gain is accomplished without taking on risk. Stocks are riskier than bonds, and some stocks are riskier than others. A custom portfolio must take into consideration each client’s ability to withstand risk, emotionally and financially, in relation to his or her need to achieve return.
- Portfolio Structure is Paramount Reducing avoidable risk is important, such as holding too few stocks, instead of the thousands that investing in DFA funds offer. Concentrating holdings in countries or industries also presents a risk that may not be rewarded over time, and can be easily avoided. We believe diversification is the key to building a portfolio with good structure.
- Smart Trading Increases Returns DFA has focused on cost-effective and sophisticated trading methods for over 25 years.
Putting Financial Science to Work Download an in-depth summary of DFA and their methods of managing money.