Our 14 Core Investment Principles

 

Drawing on decades of academic and practitioner research, as well as extensive real-world portfolio management experience, SciVest has developed a comprehensive set of Core Investment Principles which we use to maximize the long-term wealth of our clients.
Number 1
#1. Compound Over the Long-Term

Compounding portfolio returns over extended periods of time is the key to building substantial future wealth. The longer the duration and the greater the return after expenses, the more wealth that is accumulated. In the long-term, it will appear magical, but it is just math.
Number 2
#2. Avoid Excessive Volatility

Excessive levels of risk, or return volatility, reduce long-term compounded returns, which in turn diminishes future wealth. This too is just math. Thus, it is essential to control portfolio volatility to enhance long-term wealth.
Number 3
#3. Diversify to Minimize Risk

Portfolio diversification is by far the most important risk management and mitigation tool available for investors to avoid excessive portfolio volatility/risk. Moreover, effective portfolio diversification can be achieved at almost no cost. Therefore, portfolio diversification is crucial for achieving long-term investment success.
#4. Measure and Minimize Investment Costs

Academic studies demonstrate that the magnitude of investment management fees and expenses is the most significant and reliable predictor of long-term relative investment performance. As a result, investment management fees and expenses must be carefully measured, monitored, and minimized to ensure the best long-term performance outcome.
Number 13
#5. Guard Against Inflation

Over time, inflation presents a major challenge for investors who rely on their portfolio to provide their retirement income. Inflation gradually erodes the future purchasing power of both investment income and overall portfolio value. To counteract this erosion, investors must adopt strategies that enable their income and capital to grow at a rate that outpaces inflation. This approach often necessitates moving away from traditional fixed income investments.
Number 14
#6. Think Long-Term, Stay Unemotional

Overall, the vast majority of investors are too emotional, too myopic, and too focused on the short-term. Acting on these common human instincts almost always damage long-term compound returns and wealth accumulation, and thus must be resisted and avoided. Long-term, unemotional application of theoretically sound and proven investment strategies and programs are the key to long-term wealth maximization.
#7. Exploit Market Inefficiencies

In the short to medium-term, many securities and even entire markets may not reflect fundamental fair value, sometimes diverging significantly from it. This suggests that financial markets are not "efficient". However, over the long-term, the value of securities generally re-align with their fundamental fair value, indicating that financial markets become "efficient" in the long-term. These market inefficiencies can then become investment opportunities.
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#8. Focus on Undervalued Assets

The best approach for achieving long-term superior performance is to allocate more capital to assets that are undervalued (those priced below their fundamental fair value) and allocate less capital to assets that are overvalued (those priced above their fundamental fair value). In other words, buy low and sell high.
#9. Accept Markets are Very Hard to Beat

Overall, it is incredibly difficult to consistently outperform financial markets on an after-cost, risk-adjusted basis across any time horizon—be it short, medium, or long-term. However, long-term outperformance is quite possible if investors can withstand short to medium-term challenges and remain focused on long-term objectives.
Number 8
#10. Set Your Asset Allocation

The long-term "strategic" asset allocation (or asset class mix) decision is the most important factor in determining investment portfolio return and risk in the long-term. This decision involves determining the appropriate distribution of asset classes across various categories such as equities, fixed income, and alternative investments, tailored to align with the investor's financial goals, risk tolerance, and investment horizon.
#11. Tailor Your Investment Strategy Mix

Once a long-term strategic asset allocation is in place, selecting a mix of investment styles and strategies—such as value, growth, dividends, low-volatility, and momentum—becomes the next most important factor influencing the return and risk of an investment portfolio over time. This process involves tilting the portfolio toward characteristics that align with the investor's preferences, financial goals and risk tolerance.
#12. Avoid Market Timing

Attempting short-term market timing, or "tactical" asset allocation, is a costly, complex, and high-risk strategy that rarely delivers consistent long-term gains. When influenced by emotions such as fear and greed, market timing often undermines long-term compounded returns, ultimately eroding future wealth. Therefore, steer clear of attempting to time the market.
Number 11
#13. Use and Commit to Time-Tested Strategies

The effectiveness of all proven, theoretically sound investment styles and strategies can fluctuate considerably in the short to medium-term, as they gain or lose favour in the market. However, this does not imply that their long-term effectiveness is compromised. The key to achieving long-term investment success lies in the unemotional, rational, disciplined, and consistent application of these proven, theoretically sound strategies.
Number 12
#14. Rebalance to Stay on Track

Regular portfolio rebalancing helps to maintain an appropriate level of portfolio risk and may also enhance long-term portfolio returns. This often involves selling high-performing assets and buying underperforming ones, which can lead to buying low and selling high over time. Regular portfolio rebalancing ensures that the portfolio remains aligned with the investor's strategic asset allocation and investment strategy mix plan, ultimately supporting the pursuit of long-term financial success.