Investment Management

Investing creates wealth. Unlike saving (a low-risk approach designed to protect your money with little concern for growth), or speculating (a high-risk attempt to make a lot of money quickly), investing is a thoughtful, prudent approach to money management. Investing not only involves taking the reasonable risks necessary in exchange for the opportunity to earn higher long-term returns, but also requires discipline and planning.

Our Investment Philosophy

Our philosophy is to design and manage portfolios utilizing a disciplined long- term strategy based on sound fundamentals proven to influence investment success. The foundation of our investment management philosophy is based on rigorous academic research and financial science, which shows that a properly diversified selection of uncorrelated asset classes, managed with a disciplined rebalancing methodology, is the best approach to provide investors the highest probability of attaining their financial goals.

Diversification and Asset Allocation

An important component of successful investment management is reducing risks that do not generate additional expected portfolio return. The key to eliminating these risks is diversification, which is the formal name for the principle: You should not put all your eggs in one basket.

An additional risk affecting security returns that is non-diversifiable is called systematic (Market) risk. A number of empirical studies have proven asset allocation or asset class selection – choice of riskier assets (e.g. stocks) vs. less risky assets (e.g. bonds or cash equivalents), for instance – is what matters most in determining the risk and return of a portfolio. We work extensively with each client to establish a portfolio mix that meets their individual risk/reward profile after a careful assessment of financial goals, short and long-term cash flow needs, investment time horizon, and tolerance for market volatility.

Size and Value Factors

While diversification is necessary to minimize unnecessary risks, another key function of successful asset management includes capturing the highest expected return, given a specific level of risk. Numerous academic studies illustrate that value stocks (or stocks trading at low multiples of their book value per share) and smaller company stocks have historically offered higher returns. Since the early 1990’s, Willow Creek has been recommending institutional mutual funds from Dimensional Fund Advisors, an investment firm which pioneered the advantages of passively-managed, small company and value investing

Opportunistic Rebalancing – “Buy Low, Sell High”

We introduced a proprietary rebalancing program over a decade ago that captures unpredictable, sporadic market movements. Our rebalancing strategy has helped our clients significantly in volatile markets. Rebalancing, if pursued with discipline and without emotion, is one of the best ways to systematically reinforce the practice of buying low and selling high.

Tax Management

Willow Creek places a strong emphasis on after-tax total return through our ongoing portfolio tax management program, which focuses on capital gains management, tax loss harvesting, asset location, and other tax savings strategies unique to your particular circumstances.

Investment Costs

While future returns to any individual investment or asset class cannot be controlled, we can exert control over the degree to which those returns are reduced by ongoing fees and expenses. Investments with low ongoing expense ratios should be favored over investments with higher expenses. A guiding principle of the Willow Creek discipline is keeping investment expenses transparent, straightforward, competitive and low, which proportionately increases net returns.