Our Investment Philosophy
- Overview... Applying Academic Research and Ethics to Investing
- Asset Allocation
- Passively Managed Investments
- Why Avoid Actively Managed Mutual Funds
Copyright © 2020, Joel D. Bickford. All Rights Reserved.
Philosophy... Applying Academic Research and Ethics to Investing
Bickford Investment Management Services applies the latest academic research findings
to the intelligent construction and management of investment portfolios. Following is a
summary of key investment philosophies applied to ensure the best long-term risk/reward
return for our clients.
- Extremely broad and global diversification helps to optimizes the risk/reward
ratio. Funds and ETFs enable much broader diversification than is feasible with
individual stocks. Our goal is to place client portfolios on the efficient frontier line.
- Fee-only service eliminates conflicts and aligns our interests.
- Passively-managed funds including index funds and ETFs from low-cost
leaders provide a greater likelihood of success than actively-managed funds.
- Tax-managed holdings and choices are selected for taxable accounts in order to
maximize after-tax returns.
- Low-cost advisory services allow clients to retain more of their wealth.
- Buy-and-hold strategies are applied to portfolios which are constructed for
long-term performance in an unpredictable world. Market timing introduces long-
term risk by adding potentially poor trades. At Bickford Investment Management
Services (Bickford IMS) we take a scientific and academic approach to
constructing investment portfolios from low-expense holdings.
In constructing portfolios, every mix of assets will provide a different anticipated
risk/return ratio with most of them being less than ideal. By changing investment
holdings and quantities we can simultaneously improve our expected return while
lowering the anticipated risk.. This field of study is referred to as Asset Allocation.
Asset allocation involves designing a diversified portfolio of assets such as stocks,
bonds, and real estate that don't behave in the same way so you can achieve more
predictable returns with less risk.. The goal is to select optimum percentages of the
available asset classes in order to achieve the best risk/return performance.
Asset allocation considers mathematical calculation, simulation, the study of history and
scholarly academic literature, along with sound judgment.
At Bickford Investment Management, we combine these ideas with an individual investor's
financial needs and circumstances, risk tolerance, personality, and preferences in order
to create an appropriate investment portfolio.
Passively Managed Investments
Academic studies strongly support the use of passively-managed stock and bond mutual
funds and ETFs in the construction of diversified portfolios. These funds have much
lower expense ratios and therefore higher expected returns than actively managed funds.
Passively-managed funds use simple rules to select the individual securities to be held in
a fund. They do not hire stock-picking “experts” which have been shown to add far more
cost than any value they deliver.
The most commonly known passively-managed funds are Index Funds and Exchange-
Traded Funds (ETFs), but there are other passively managed mutual funds.
For example, we rely heavily on passively managed mutual funds provided by
Dimensional Fund Advisors (DFA) in our efforts to construct efficient portfolios. DFA
bases their mutual funds on the science of capital markets and increases returns
through state of the art design and trading. Vanguard is a key index-fund and ETF
provider which is also well-represented in our portfolios.