Investment Beliefs

At Model Capital, we have a set of investment beliefs that are grounded in well-known investment theory:

1. We strive to achieve significant return over index for our investors

We think that this is the main reason for an asset manager to be in business. Investors who are satisfied with index return can achieve it quite easily themselves – especially in this age of ETFs. In order to justify their fees, managers must outperform the index, after costs.

2. We focus on asset allocation

Research has shown that close to 90% of return and risk for a diversified balanced (stock-and-bond) portfolio comes from asset allocation. Focusing on the 90% has high potential of achieving good above-index performance.

3. We follow systematic, model-driven process

Asset allocation process should allocate to asset classes with the best expected risk-return combination. Obtaining mid-term expected returns (for strategic) and short-term return forecasts (for tactical asset allocation) is the hard part. Once we have the return forecasts, we allocate to asset class(es) that are expected to perform the best, with the least risk.

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