Premier’s investment strategy brings its academically based philosophy to real portfolios to real clients in the real world.
The usual Wall Street approach to investing results in a wide range of outcomes, with failures outnumbering successes. Investors too often pay the price for ill-conceived strategies. Because its primary concern is marketing, Wall Street focuses almost exclusively on return and pays little attention to risk. Wall Street worries far more about what sells than it does about what works.
Premier Financial Group realizes that risk and return are equally important. We use an evidence-based, academically supported approach to identify what works and what does not.
The evidence strongly indicates that diversification provides the best protection against investment failure. The evidence also shows that “beating the market” is the result of luck, and that luck can never be relied on as a basis for financial success or financial peace of mind.
For all the academic and Nobel Prize winning research surrounding our investment philosophy to mean anything, Premier must be able to create real long-term portfolios that work for real clients. Before our clients can experience success, there must be a way to put the theory into practice.
For our retirement plan trustees and participants this shows up in the form of a set of well-designed passive model portfolios, broadly diversified and utilizing a structured asset allocation. The building blocks for these model portfolios are Dimensional Fund Advisors’ (DFA) structured asset class funds. Premier utilizes DFA funds because of their complete alignment with top academic research, their consistency and very low cost.
These portfolios incorporate the dimensions of the market which have been shown to have the most reasonable risk and return characteristics. Large and small company stocks, value stocks, and international large and small company value stocks are all included in our model portfolios. Each of these asset classes has good long-term rates of return, but significant variability in returns over shorter periods. Constructing portfolios with multiple asset classes increases diversification and helps maintain consistent returns of the portfolio.
Next Chapter: Benefits of Premier's Approach
