In this blog I want to give you a quick overview of our investment beliefs at Oliver Asset Management, namely Evidence Based Investing.
Who are evidence based investors?
You may well have heard us mention Dimensional Fund Advisers in the past, but probably will not have seen them mentioned anywhere else.
They are the worlds 8th largest fund management company. They don’t advertise (helping to keep costs low) and they manage and offer research exclusively to institutional investors and a select group of fee based advisers (including us at Oliver Asset Management).
What is evidence based investing?
Evidence based investing is based on a belief in the efficiency of the markets, and that the market is an effective information-processing machine.
Rather than attempting to predict the future or outguess others, information is drawn about expected returns from the market itself—using the collective knowledge of its millions of buyers and sellers as they set prices of shares.
By trusting markets to do what they do best—namely drive information into prices—Dimensional Fund Adviser’s time can be freed up to where they believe they have an advantage, which is how they interpret their research. They take a less subjective, more systematic approach to investing—an approach they can implement consistently, and investors can understand and stick with, even when the markets seem challenging.
How do we use evidence based investing?
By using Dimensional research principals in conjunction with our investment partners, we are able to utilise low cost globally diversified portfolio’s with strong track records.
We stick to our principals in helping to educate and drown out the external noise from fund houses who claim to have the next big idea. This in turn frees up our time to focus on what brings you value, like planning out and visualising your future, using our sophisticated cash flow modelling software.
Why use evidence based investing?
The reasons we believe in evidence based investing are numerous, and too long to fully implement into this blog, but in short….
Evidence tells us that trying to outguess and trying to time the market does not work in the long term, and selecting funds based on past performance is extremely unlikely to continually succeed.
Daily news sells on fear which can in turn challenge your investment discipline. For example fear of a market crash, or fear of missing out on the next big idea.
By avoiding market timing and chasing the next expensive “star” fund manager, diversifying globally, taking control of costs and turnover, and tuning out the noise we can focus together on actions that will add value to your financial plan.
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Where can you access evidence based investing?
Get in touch, or pop into our office for a coffee and we can chat through our thoughts with you.