Enriching Lives, Realizing Visions BLOG CONTACT US CAREERS CLIENT LOGIN Investment Approach OUR APPROACH AND PHILOSOPHY | RISK & RETURNS | EXPERIENCE & KNOWLEDGE | RISK & UNCERTAINTY Our Approach and Philosophy At Diversified Trust, we are dedicated to building and managing portfolios with a goal-oriented approach to their exposures, risks, costs and expectations. That means understanding the financial world as it is priced right now. It means having a dedicated in-house team of seasoned investment professionals who spend each day with on-going research, due diligence, manager selection and portfolio construction. Finally, it is the ability to use our almost $7 billion of assets under management to gain access to managers and solutions from every corner of the investment marketplace at the lowest costs possible. Your Goals We strive to clearly understand what "success" means to you. Your goals set the objectives for the monies you entrust to us, whether they are a sustained spending rate or to never fall below a targeted valuation. Your Idea of Risk There are different kinds of Investment risks and knowing how each would relate to your goals for the portfolio allows us to build a set of exposures with the highest probability of making your goals your reality. Your Portfolio Building the portfolio to make all of this happen requires selecting investment instruments (whether active or passive, liquid or illiquid) and combining them into a whole that will perform in both strong and weak economic environments. We think differently from other firms by not starting with asset classes first. Asset classes and investment solutions are messy things, often packaged to sell rather than help build a specific portfolio. Starting with the risks themselves, and how they are priced, allows us to better build from the bottom up. Risks Define the Returns and the Returns Define the Portfolio The path to success is dependent on investment markets and those change over time. BUILDING A SUCCESSFUL PORTFOLIO IS MUCH LIKE SAILING… We can identify our objective, such as a day sail out to Catalina and back. But the path we take today could be very different from the one we might have taken last week, as the wind, waves and other boats all could impact today’s best course. A good investor bases his or her decisions on what the market can give us today, just as a good sailor understands the current weather. Markets pay investors a premium, or return, for taking on uncertainty. Getting the portfolio right starts with: Understanding the premiums that are being paid today; Sizing your exposures to those premiums consciously and exactly; and Aligning them with their ability to reach your specific investment goals. Investment Approach Managing Volatility in a Portfolio Finding and Building Solutions Takes Experience and Knowledge A great portfolio requires great managers. This means ones with solid reasoning for their approach, with evidence of success, and attractive fees. To hire great managers, we need great people who have done that for years, following an approach that we can show leads to success over relevant, rolling time horizons. We have both. A Good Reason for Performance We have to understand a manager’s rationale for investing. They have to show us that their process can consistently deliver results over time. Results aren’t everything, but they are something Comparing performance versus a benchmark generally does not separate the talented ones from the lucky ones. A well-founded approach consistently executed should show up in the results. If it doesn’t, that tells us something, too. Fees Matter In the end, it is the results that matter. And while returns can vary through time, fees are a constant. We pay a great deal of attention to the fees we negotiate on our clients’ behalf. To read past investment reports, click here. Client Q&A Why does Diversified Trust have an internal Municipal Bond Team? Why does Diversified Trust have a Private Equity Offering? SELECTED RESOURCES 12/31/20 Muni Report The Great Divide 25 Things That I Have Learned About Investing The Pinnacle of Capitalism: A History of Rockefeller Center "Passive" Investing Isn't Passive EXPLORE A CASE STUDY “Diversified Trust helped me create a solid transition plan for my business. They coordinated with my lawyers, my CPA, and most importantly, the members of my family.” Family Business Owner Risk is More Complex Than Just Uncertainty Risk is easy to say but much harder to define… An investor is often asked to express their risk tolerance. That is hard. Because risk has a wide number of permutations. Your individual definition of risk, combined with your set of goals makes the process of building the right portfolio a bespoke effort each time we undertake it. And it should. Spending Over Time Managing volatility risk is very important when spending is our chief goal. The more varied the returns, the less our portfolio can spend. Our success in delivering a consistent spend is directly impacted by how much the portfolio’s returns vary over time. Trailing a Benchmark The risk of differing from the benchmark for the portfolio is called tracking error and the more the portfolio is unlike the benchmark in terms of exposures, the bigger the chance to experience a return that is vastly different, either positive or negative. The more comfortable an investor is with their benchmark, the closer they may want the portfolio to follow it. Experiencing a Loss For many investors, the real definition of risk is the losing of some significant part of their portfolio’s value. We call this draw down. The safer the assets in a portfolio, the smaller the potential draw down but also the lower the overall return and less spending a portfolio can do. Understanding the trade-off can help manage the impact of a loss on your long-term goals. SELECTED RESOURCES White Papers: Value and Momentum: Key Concepts Does the Investment World Suffer From ADHD? The Vantage Point Blog: Bitcoin, Blockchain, and Bubbles In the News: Financial Planning Magazine Cover Story: Long-Term Care Join Our Newsletter Contact Us Disclosure ©2007-2021 Diversified Trust