Wealth Management

ECF Wealth’s investment philosophy incorporates many of the principles of the “Modern Portfolio Theory.” This theory has been thoroughly researched and supported for decades by leading financial academics, including several Nobel Prize winners. This strategy is based on several fundamentals, including:

Market efficiency – The price of financial assets reflects all information publicly available. It is impossible to know ahead of time the next direction of the market as a whole. The theory implies that investors cannot consistently outperform the overall market by conducting “active” investment strategies. “Active” investment strategies include attempting to “time the market” and conducting “stock picking.”

Asset allocation – Construction of an investment portfolio as a whole is more important than individual security selection. The appropriate investment allocation across asset classes (e.g., stocks, bonds, cash) will have far more influence on long-term portfolio results than the selection of individual securities.

Long-term investing – Investing for the long-term is critical to investment success because it allows the long-term characteristics of the asset classes to surface.

Evaluating risk – Investment portfolios can be created and tailored to a level of expected risk. Over long periods of time, there is a relationship between the level of risk assumed and the return that can be expected in an investment.

Diversification – The level of risk can be reduced by increasing the diversification (types and number of securities) in a portfolio without significantly changing the portfolio’s overall expected return.

Asset location – location, location, location. Matching investments with their most effective account types can result in more favorable after-tax returns (e.g., some investments are better held in a taxable account while others best held in a tax-deferred account like an IRA).

Expenses– Investment costs are inevitable, but minimization of investment costs and taxes can enhance long-term performance. ECF Wealth believes in having all costs fully transparent and structured in a way where both parties have a vested interest in performing positively.

Based on this investment philosophy, ECF Wealth creates a customized investment strategy for each client.