JUDGMENT ALSO MATTERS.
ASSET ALLOCATION PORTFOLIOS
We value the human element of investing.
At RiverFront, our people are the art. When we apply ‘art’ to our dynamic investing philosophy, we are putting our intellectual capital to work. While any company can read the data produced by mathematical models and other tools, it’s the people who skillfully interpret the data that separate RiverFront from the others.
While extremely important to the process, RiverFront doesn’t rely on the just numbers and analytics. We lean heavily on our team’s experience, intelligence and judgment to make the best possible strategic and tactical asset allocation decisions.
When doing so, we often discover ‘art’ can, and in fact should, override the data (aka, ‘the science’). It’s this ‘artful investing’ that enables us to skillfully navigate the often volatile market while carefully balancing client risk and return objectives.
The Three Rules
We use three rules to help us in this process:
RULE 1: DON’T FIGHT THE FED.
We are constantly analyzing the actions and intents of policymakers in both the US and abroad. If policymakers are clearly intent on achieving a result, while markets often doubt their resolve or their ability to achieve that result, we take them seriously.
RULE 2: DON’T FIGHT THE TREND.
We try not to fight powerful trends, even if we think they may ultimately be proved wrong. We live by JM Keynes observation that “the crowd can remain irrational longer than you can remain solvent.”
RULE 3: BEWARE THE CROWD.
As we mentioned above, if an extreme can be identified, especially when our Price Matters work confirms this extreme (stocks in the late 1990s, real estate in the late 2000s), then we need to be willing to lean the other way and to act aggressively once the trend changes.
The information above applies to RiverFront Investment Group Asset Allocation Portfolios only.
RiverFront is owned primarily by its employees through RiverFront Investment Holding Group, LLC, the holding company for RiverFront. Baird Financial Corporation (BFC) is also a minority owner of RiverFront Investment Holding Group, LLC and therefore an indirect owner of RiverFront. BFC is the parent company of Robert W. Baird & Co. Incorporated (“Baird”), a registered broker/dealer and investment adviser.
- RiverFront’s Price Matters® discipline compares inflation-adjusted current prices relative to their long-term trend to help identify extremes in valuation.
- Mean reversion is the tendency of a variable, such as a stock price, to converge on an average value over time.