A core tenet of the Numetrix Capital’s investment philosophy is that a multi-manager, multi-strategy, and multi-methodology approach is superior to traditional asset allocation or what has evolved into “market portfolio theory.”
At Numetrix, we believe in order to be successful over the long-term, investors need to diversify not only across asset classes but also across investment strategies, manager methodologies, and most importantly, investment managers. This is what we deem “modern diversification.”
We firmly believe that no single investment firm, let alone any single manager, can consistently produce superior investment results in all areas of investing. For this reason, Numetrix brings together experienced investment managers from separate, independent firms who possess diverse areas of expertise and specialty.
Next, it is important to recognize that all individual investment strategies, especially mutual funds and ETFs, tend to underperform at times. Whether you utilize a growth, value, cap-size, trading, trend-following, mean-reversion, buy-and-hope, or global macro strategy, all will experience periods when the specific style is out of favor.
Even the approach used by Warren Buffett, who is viewed as one of the greatest investors of all time, has been “out of favor” from time to time. Recall that the “Oracle of Omaha” was ridiculed in the late 1990’s due to the fact that he ignored the tech boom and his performance suffered.
Thus, in order to ensure that a client’s portfolio doesn’t underperform for an extended period of time, Numetrix seeks to incorporate “real diversification,” by utilizing multiple strategies, managers, and methodologies with the overriding goal of using the right strategy at the right time.
Portfolios That Adapt to Changing Market Environments
A simple truth in the world of investing is there is no one single investment strategy, including mutual funds and ETFs, that can provide meaningful outperformance in all market environments.
This is where diversification by manager and methodology comes in.
One of the constants in the markets is that the overall environment is constantly changing. Oftentimes the market’s focus will change rapidly and without warning. Bull markets ultimately give way to bear markets and vice versa.
Experienced investors know that the market’s focus on a particular crisis will eventually fade and turn to something else such as economics, earnings, or valuations. As such, it is vital for portfolios to have the ability to adapt to changing environments.
At Numetrix, we believe that financial professionals must employ strategies within client portfolios that can keep pace with changing market environments. For example, the same pedal-to-the-metal approach that was highly successful and all the rage in the late 1990’s led to intense pain and wealth destruction during the ensuing bear markets seen from 2000 through 2008.
All of the investment programs offered by Numetrix Capital are designed to adapt to changes in market environments. Numetrix portfolios use different strategies and different managers during bull market and bear market periods. And Numetrix will utilize different strategies and managers in trending markets, in sideways markets, and in highly volatile markets. The overriding goal of our programs is to match the right tools with the right market environment.
Smarter Portfolio Designs
While a great many investment management firms offer a dizzying array of products, we believe strongly that a platform full of choices does not a portfolio strategy make.
With an overwhelming number of investment options available, the simple truth is advisors are left to their own devices to constantly monitor performance and to make the really tough, important decisions relating to which investment managers and programs to use and when.
This is where Numetrix can help. One of our primary jobs is to alleviate the “selection” and “timing” risks by providing financial advisors with a suite of multi-manager, multi-strategy, and multi-methodology investment programs where we take responsibility for the selection, the monitoring, and then making adjustments when needed.
Numetrix programs are designed to:
- Diversify across strategies, managers and methodologies
- Select which money managers/programs to utilize within an allocation strategy
- Monitor the performance of the managers/programs relative to the stated objectives and benchmarks
- Adjust the use of managers/programs when appropriate
Numetrix managers come from six independent management firms and bring together more than 130 combined years of money management experience. Think about that. Numetrix managers have been live, on the firing line, managing client accounts for more than a century. And the good news is we’ve learned a thing or two along the way.
Thus, we are confident that we are well suited to understand, apply, and adjust the strategies and systems employed by our stable of money managers.
As money managers ourselves, we are intimately familiar with the nuances of a manager’s investment process and can create realistic expectations for each program utilized in an allocation. This also means that we are well qualified to identify when a manager’s strategy has changed or is not living up to it objectives – and how best to make adjustments.
And the bottom line is this makes for smarter portfolio designs.