3 CORE PRINCIPLES
Focus on long term results
Over the long term, equity markets have rewarded long term investors. In the short term however equity markets historically have been very volatile. It is important to not have short term volatility alter long term equity strategy. Funds needed in the short term should avoid equity exposure as a general rule.
In any ten year period there will be a considerable range in returns between various equity asset classes. There will always be a best and worst asset class. The problem is one doesn’t know which will do well and which will do poorly in the future. Managing portfolio risk requires that all asset classes be included in an organized fashion. The long term focus is on portfolio results, not individual asset class results.
Diversify intelligently
Asset class diversification is essential to reduce risk while still capturing market returns. Asset classes are defined by multiple parameters.
For example :
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Stocks vs Bonds
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Domestic stocks, International stocks, and Emerging Market stocks
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Value stocks and Growth stocks
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Large Cap stocks and Small Cap stocks
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Alternatives stocks such as Real Estate stocks
Over 10 year periods there can be wide differences in return by asset class. 3DL diversifies portfolios in a disciplined fashion. They hold roughly 20,000 securities spread across 12 equity asset classes in over 40 countries.
Utilize low cost asset class funds or ETF's
3DL Capital Management portfolios use low cost and low turnover asset class funds from Dimensional Fund Advisors or low cost ETF’s. This can result in substantial savings over a portfolio of actively managed mutual funds.
Are you invested the right way?
Most investors have little or no formal training on how to invest. Unfortunately, unbiased sources of information are hard to come by. Brokerage firms and mutual fund companies have their own agenda which doesn't necessarily align well with the investor's agenda. Making it worse equity markets can be very volatile resulting in alternating cycles of fear and greed. Click below to find 5 common mistakes made by investors.