Investment Management

Our investment management goals are clear: to preserve and protect the wealth of our clients through the proper assessment of risk tolerance and developing a clear understanding of each client’s individual needs.

Our portfolio’s asset allocations are built according to rigorous academic research and logic and managed using sophisticated due diligence techniques. The following methods of analysis and investment strategies are utilized in formulating investment advice and managing client’s assets:

Modern Portfolio Theory: In 1952, Nobel Laureate Dr. Harry Markowitz took the practice of investing to an entirely new level by developing both a new paradigm and process that enabled investors to optimize the benefits of diversification. That process is known today as strategic asset allocation—which matches efficient portfolios with the utility needs of each investor. Dr. Markowitz’s work has served as the bedrock for smart investing for almost six decades and continues to do so today.

Correlation Analysis: Correlation analysis is utilized to avoid concentrated holdings by diversifying across asset classes whose investment returns are not driven by the same underlying economic factors. Assessing the measure of correlation of performance of the asset classes allows for the identification of asset classes that are overly dependent on similar economic factors, and thus higher risk. The degree to which investments move in sync, their correlation, is measured statistically. A rolling analysis of correlations can test the diversification power of the asset classes of a portfolio.

Fundamental Analysis: Fundamental analysis allows for the selection of investments based on fundamental metrics of a company such as size, dividends, cash flows, sales, and book value.

Diversification: While diversification does not assure a profit or protect against a loss in declining markets, it is a portfolio strategy designed to reduce exposure to risk by combining a variety of investments, such as stocks, bonds, and real estate, which are unlikely to generate parallel returns at the same time.

Asset Allocation: Asset Allocation is the process of choosing among the available asset classes. RBFI structures a Client portfolio by taking into account the Client’s investment objectives and feelings about the balance between risk and return. Asset classes and their relative weighting are matched to a model that through our research, have displayed similar risk-return characteristics. Investments are then selected to match the criteria of a specific asset class. From time to time, market conditions may dictate adjustments to the relative weightings among asset classes.

Quantitative Evaluation: Quantitative evaluation begins with a list of holdings representing a specific asset class, or sub-asset class, drawn from the available universe. This initial list is then closely reviewed and sifted based on a proprietary quantitative model that includes several Modern Portfolio Theory (MPT) analytics (R-squared, Jensen’s Alpha, information ratio, Excess Sharpe, etc.). This type of review is used as an indicator of the probability that the manager’s returns were based on a consistent skillful investment process. Further research serves to clarify the understanding of the manager’s investment process, specific risk controls and sources of excess returns. The underlying focus within this process is to identify exceptional managers that can offer unique investing insights.

Risk of Loss for All Types of Analysis:

Neither asset allocation nor diversification assures a profit or protects against a loss in declining markets. Investing in securities involves risk of loss that clients should be prepared to bear.

International investing presents certain risks not associated with investing solely in the United States. These include, for instance, risks relating to fluctuations in the value of the U.S. dollar relative to the values of other currencies, custody arrangements made for foreign holdings, political risks, differences in accounting procedures and the lesser degree of public information required to be provided by non-U.S. companies.

Investing in emerging markets involves greater risk than investing in more established markets. Such risks include exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity, and the potential lack of strict financial and accounting controls and standards.

Investing in fixed income securities involves special risks not typically associated with equity securities. These risks include credit risk, which is the risk of potential loss due to the inability to meet contractual debt obligations, and interest rate risk which is the risk that an investment’s value will change due to a change in the level of interest rates. Additionally, there is an inverse relationship between bond prices and interest rates specific to fixed income securities. As interest rates rise, bond prices fall and, conversely, as interest rates fall, bond prices rise.

Investing in micro, small or mid-sized companies may involve risks not associated with investing in more established companies. Since equity securities of smaller companies may not be traded as often as equity securities of larger, more established companies, it may be difficult or impossible for the securities to sell.

Investing in a non-diversified fund that concentrates holdings into fewer securities or industries involves greater risk than investing in a more diversified fund.

An investment in commodity-linked derivative instruments may be subject to greater volatility than investments in traditional securities and are not suitable for all investors.

Financial Planning

PLANNING for education expenses, saving for retirement, managing your debt, planning your estate. With a long-range outlook, we tailor a focused strategy for helping you to work towards your financial goals. Continue reading

Tax Planning & Preparation

TAX-ADVANTAGED retirement plans, investment taxes, business tax, new tax deductions… so many things to consider. And with the tax laws changing each year, you need professional guidance. Continue reading