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In 2021 Warburton Capital received a Trademark for our Investment Allocation Process – IAP™.

You may wonder what makes the Warburton Capital process different from the processes of other investment advisory firms. According to an objective, statistically significant academic study, asset allocation is the primary determinant of a portfolio’s growth and volatility with active management (security selection and market timing) playing a minor role1.

We determined that the most productive way for us to help our clients is by utilizing an evidence-based process to create a purposeful investment allocation that increases the odds of our clients having a good investment experience and achieving their financial goals.

Our Investment Allocation Process is a dynamic process which involves combining safer assets (Short-Term Investment-Grade bonds) with risky assets (Small Cap, Large Cap, Value and Growth Stocks both Domestic and Foreign). 

Having derived the investment allocation, we are not simply ‘buying and holding’ we are ‘buying’ and looking for strategic opportunities to ‘rebalance’ the safer and riskier assets back to the target allocation when the variance has exceeded permitted tolerance.  Additionally, we monitor client portfolios looking for ‘tax-loss harvesting’ opportunities to create tax benefits for our clients.

What makes our IAP™ Special is that the discipline of our IAP™ should result in us engaging in fewer futile activities than traditional investment advisors.  We believe that investing is a statistical exercise and the discipline of our IAP™ stands on a foundation of statistical evidence in an effort to increase the odds of investors having a good investment experience and achieving their financial goals.

Does this make sense to you or does it sound like industry jargon?  We would be happy to chat at length if you desire.

1 Gary P. Brinson, CFA, Randolph Hood, and Gilbert L. Beebower (known collectively as BHB) in their seminal paper, “Determinants of Portfolio Performance,” published in 1986 in the Financial Analysts Journal.  BHB examined the quarterly returns of 91 large U.S. pension funds over the 1974 to 1983 period, comparing the returns to those of a hypothetical fund holding the same average asset allocation in indexed investments. A linear time-series regression yielded an average R-squared of 93.6%, leading BHB to conclude that asset allocation explained 93.6% of the variation in a portfolio’s quarterly returns.