Below are quotes from the RFP that Savant Capital Management submitted in May 2009.
- We are proponents of an indexed and passive approach to investing. We believe markets are very efficient. Accordingly, we content that it is very difficult, if not impossible to consistently “beat the market” through stock selection and market timing techniques. While it is always possible to identify the winners after the fact, such top performers rarely repeat their above-average returns. While picking tomorrow’s winners is the focus of much of the financial industry, there is a huge body of academic and industry evidence that shows that “active” management merely adds significant cost, risk, and uncertainty. Furthermore, the additional risk associated with trying to beat the market tends to make it difficult to achieve effective diversification.
- Alternately, Savant builds portfolios using institutional index funds, passive asset class funds, exchange-traded funds, and structured investments. These “building block”-type investments are extremely low cost, very broadly diversified, and allow our clients to focus on effective portfolio engineering and rebalancing. The predictability of such funds allows investors to precisely target and maintain effective and optimal asset allocation strategies.
- Philosophy: We encourage clients to adopt a broadly diversified global equity strategy.
- We contend that over the long term, a properly-engineered equity portfolio, based on modern portfolio theory (MPT), will earn a 2-3% return advantage, with less volatility, than typical market based index funds.
- Managers of ACTIVE funds significantly under-performed manager of INDEX funds during the past 1, 3, 5, 10, and 15-year periods.
- Savant analyzes fund products using a proprietary fund review process.
- The firm concentrates the fixed income strategy in the high quality short-term, intermediate-term, inflation-protected, and foreign bonds.
- By minimizing the volatility in the fixed income portion of our portfolios, clients can have the opportunity to be more aggressive in equities.