Our 14 Investment Beliefs & Philosophies

 

With decades of academic and practitioner research, as well as extensive live portfolio management experience, SciVest has developed a comprehensive set of 14 investment principles to manage our clients' portfolios. 
Number 1
Number 1

Portfolio return compounding over long periods of time is the magic ingredient to generating significant future wealth.
Number 2
Number 2

Excessive volatility/risk lowers long-term compounded returns. As a result, excessive portfolio volatility must be avoided to maximize long-term wealth.
Number 3
Number 3

Portfolio diversification is by far the most important risk management and mitigation tool available to investors to avoid excessive portfolio volatility/risk. Furthermore, good portfolio diversification can be achieved at almost no cost. Thus, portfolio diversification is essential to maximize long-term investment success.
Number 4
Number 4

In the short to medium-term, many securities (potentially whole markets) may not reflect fundamental fair value, sometimes deviating significantly from fair value (i.e., financial markets are not “efficient” in the short to medium-term). Nevertheless, in the long-term, security values ultimately gravitate towards fundamental fair value (i.e., financial markets become “efficient” in the long-term).
Number 5
Number 5

The best chance to outperform in the long-term comes from overweighting assets that are undervalued (i.e., inexpensive relative to income and risk) and underweighting assets that are overvalued (i.e., expensive relative to income and risk).
Number 6
Number 6

Overall, financial markets are incredibly difficult to consistently “beat” on an after-cost, risk-adjusted basis over any time horizon – short, medium, or long-term. Nevertheless, long-term outperformance is quite possible if investors can bear short and medium-term pain and remain focused on long-term objectives.
Number 7
Number 7

The magnitude of investment management fees and expenses is the most significant and predictable differentiator of relative long-term investment performance. As a result, investment management fees and expenses must be minimized, carefully monitored, and managed to ensure the best long-term performance outcome.
Number 8
Number 8

The long-term strategic asset allocation (i.e., asset mix) decision is the most important factor in determining investment return and risk in the long-term, not individual security decisions.
Number 9
Number 9

Short-term market timing (i.e., tactical asset allocation) is costly, difficult and risky, and thus cannot be expected to consistently add value in the long-term. If done based on emotions such as fear and greed, market timing invariably damages long-term portfolio returns and thus future wealth.
Number 10
Number 10

After the long-term strategic asset allocation decision, for properly diversified portfolios, exposures to various investment styles and strategies (such as value, growth, dividends, low-volatility, momentum, etc.) is the next most important determinant of investment return and risk in the long-term (not individual security decisions).
Number 11
Number 11

The short to medium-term efficacy of all proven, theoretically sound investment styles and strategies can vary significantly through time (i.e., go in and out of favour within the market). This, however, does not necessarily mean that their efficacy in the long-term is jeopardized. Emotionless, rational, disciplined and consistent application of proven, theoretically sound, investment strategies is the key to the long-term investment success.
Number 12
Number 12

Regular portfolio rebalancing helps to maintain an appropriate level of portfolio risk and will also enhance long-term portfolio returns. Regular portfolio rebalancing is thus important to achieving investment objectives.
Number 13
Number 13

In the long-term, inflation is the greatest enemy of investors requiring income generated from investment portfolios to provide for their living needs. Inflation eats away at the purchasing power of income generated from investment portfolios, as well as the purchasing power of the overall portfolio itself.
Number 14
Number 14

Overall, many investors are too emotional, too myopic, and too focused on the short-term. These instincts damage long-term compounded returns and wealth accumulation, and thus must be resisted. Long-term, unemotional application of a sound investment program is the key to long-term wealth maximization.