The Importance of a Flexible Investment Strategy

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VIDEO: How Our Flexible Investment Approach Benefits Clients

1:28 minutes

Executive Vice President of Portfolio Management and Co-Chief Investment Officer, Bill Glaser, explains how Fisher Investments takes advantage of these regular leadership rotations. Based on historical analysis of category leadership, Fisher Investments determines which countries, sectors and investment styles might perform best in the future given its economic forecast.

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Many investment managers and funds specialize in particular areas of the market. They might invest in only US stocks, high-yield bonds or even more specific areas of the market, like small-cap growth stocks. A snapshot of their performance at any given moment might seem impressive. But what happens when their narrowly focused investment strategy falls out of favor?

Investment strategies can be broken into many different categories, such as:

  • Asset class: stocks, bonds, cash and other securities
  • Style: growth vs. value
  • Size: large, mid and small capitalization companies
  • Geographic region: US, foreign developed markets and emerging markets

Investment categories cycle in and out of favor over time. Take emerging markets, which outperformed all other categories from 2003 to 2007 and then dropped to the worst performer in 2008. Or the years from 2011 to 2015 when the best performers—in succession—were bonds, emerging markets, small caps, US stocks and growth stocks. A strategy focused on a single asset class, sector, market capitalization range or country would have missed out on other top performers during this period.1

No One Style Is Best for All Time (Click to Enlarge)

Table of Stocks and Bonds

More importantly, there is no predictive pattern in past performance to tell which styles will be the next leaders and laggards.

Research-Driven Agility

In our experience, no single strategy is always superior, and those who adopt such an approach can underperform as leadership styles continually rotate. At Fisher Investments, we use an active investment approach, led by our Investment Policy Committee and in-house Research department, that helps us respond to market shifts and their impact in clients’ portfolios.

Fisher employs a large team of investment professionals who analyze regions, countries, sectors and industries from a top-down perspective, as well as professionals who analyze individual securities from a fundamental perspective.

When managing investments for our clients, we believe this comprehensive approach to research allows us to invest across a variety of areas in the market, using a flexible strategy designed to help capture potential opportunities for our clients consistent with their goals and objectives.

Our active investing strategy is based upon our forward-looking view of markets. We make tactical adjustments along the way, moving clients’ portfolios into the types of stocks and bonds we expect to perform best. This could mean:

  • Shifting portfolios’ investments more to foreign stocks when we believe global economic factors favor them more than US stocks
  • Favoring smaller or larger businesses depending on our view of the current stage in the business cycle
  • Moving to defensive positions if we identify a bear market early on and believe a change in strategy is in your best interest

No money manager is correct every time, including Fisher Investments, but we believe the lessons we have learned from managing investments through many market cycles provide us invaluable insight.

Experienced Investing Leadership

We combine the lessons we have learned over time with thorough research from our in-house analysts to make all decisions, which are made by our 5-member Investment Policy Committee (IPC). The IPC boasts over 150 combined years of industry experience and has published numerous books on a variety of aspects of investment strategy. Ken Fisher, IPC member and Co-Chief Investment Officer, is a New York Times bestselling author who has written eleven books on investment strategy and was Forbes’ longest continuously running columnist.

We manage our clients’ portfolios with the understanding that each client has a unique set of considerations, which is why we customize investment allocations to suit your specific needs. These considerations include:

  • Cash flow needs
  • Investment time horizon
  • Risk preferences
  • Allocation of other assets not under our management
  • Other investment preferences

World-Class Client Service and Support

When you choose Fisher Investments, you will get a dedicated Investment Counselor who acts as a liaison between you and the IPC, communicates changes about your portfolio to you and helps you stay informed about investment strategy.

You will also have access to a variety of events designed to provide regular market updates and answer any questions you have about your Fisher portfolio, as well as questions about other investment advisers or alternatives you may be considering.

These are just some of the ways in which Fisher Investments provides clients with a flexible investment strategy designed to help them respond to market shifts. If you are interested in learning more about how this approach allows us to offer uniquely tailored portfolio management services, please contact us to request a meeting.

1 Source: FactSet, as of 2/9/2017. Small cap stocks represented by Russell 2000, US stocks represented by S&P 500, Emerging Markets represented by MSCI Emerging Markets Index, bonds represented by Barclays Aggregate US Bond Index and growth stocks represented by Russell 3000 Growth.

Investing in securities involves a risk of loss. Past performance is never a guarantee of future returns.
Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations.