An Investment Approach for an 'AND' World
Investing in Relationships
Investing in today’s dynamic financial markets requires a different kind of mindset and process – one that takes into account seemingly contradictory concepts. Strategic and tactical. Quantitative and qualitative. Active and passive. RiverFront embraces this duality with a process that is both art and science.
Rigorous data analysis meets informed insight in our asset allocation process. Some asset managers employ a “set it and forget it” style based solely on historical returns and volatility.
At RiverFront, we believe the best way to address a market that is always evolving is with an approach that is both tactical and dynamic.
Long-Term Thinking & Short-Term Flexibility
In our view, relative total returns between asset classes are driven both by valuation in the long-term — what we call Price Matters® — and by changes in fundamentals and investor psychology in the near-to-intermediate term, governed by what we refer to as The Three Tactical Rules. The careful blend of these two methodologies creates a decisive long-term strategy with the flexibility to drive shorter-term tactical differences in returns.
Harnessing Data & Experience
RiverFront’s proprietary quantitative tools turn tremendous amounts of raw data into contextualized information that look well beyond short-term market volatility and into a horizon of long-term investment. The investment team then applies our collective experience, intuition and creativity to interpret this information and drive decisions.
Uncommon Transparency & Deeper Relationships
As we make changes and adjustments to our asset allocations, we openly share the details and rationale of each with our financial advisors. This uncommon transparency holds us accountable and we believe helps advisors have informed conversations and build deeper relationships with their clients.
Strategic & Tactical
We believe current value relative to its historical trend can be a powerful long-term predictor of relative returns. Our extensive analysis, based on historical return rates, suggests that there is a strong relationship between the price paid for an asset at the beginning of an investment period and its return over the next 5-10 years.
Our Three Tactical Rules
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.
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.”
Beware the Crowd at Extremes
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.