INVESTMENT PHILOSOPHY
The road to retirement and other short- and long-term goals requires investment strategies that are built with the long haul in mind. It requires vehicles that strive to produce results under all conditions. Quality design, solid construction, and efficiency—for the financial road, these qualities are integral.
The sound design behind our investment strategies helps you navigate sudden twists and turns, guiding clients in the direction of their ultimate financial destinations. These strategies are the product of FMN's tested investment philosophy developed through 30 years of innovation. At FMN, there are six steps in this process.
1. ASSET ALLOCATION. Each FMN Client Has Their Own Unique Portfolio and Personal Performance Benchmark. The specific mix of stocks, bonds, and cash is critical in pursuing investor goals. A landmark 1991 study concluded that asset allocation—not market timing or stock selection—is the primary factor in determining why different portfolios exhibit different return results.
2. PORTFOLIO DESIGN. How we engineer our strategies helps to ensure investors are invested in a diversified mix of stocks, bonds, alternatives* and cash investments. Our view of diversification doesn't end there. Within the asset classes are investment styles, sub styles, individual money managers, and finally, individual securities. Client portfolios are developed based on extensive efforts to understand and define client investment goals and risk tolerances which ultimately serve as the client's "personal benchmark."
3. INVESTMENT SELECTION. We believe utilizing specific investments selected by FMN's Investment Committee, and specialist money managers helps to produce more consistent results than generalists who drift from one style to another. Our executive investment committee, which have decades of combined investment experience, lead the research and investment teams. At our core we are an analytically-driven and research-focused firm. We conduct research the traditional way, on a security-by-security basis. Given our research orientation we are predisposed to relying on analysis rather than opinion and fundamentals more than media hype.
4. PORTFOLIO CONSTRUCTION AND MANAGEMENT. Each market segment exhibits different characteristics, return potential and risks. Focusing on diversification, we structure our portfolios across all segments designed to keep investors focused on the road ahead. FMN utilizes a robust set of sophisticated investment strategies across traditional and alternative asset classes. Our investment professionals have extensive capabilities in equity and fixed income research and our asset allocation framework integrates leading-edge strategies across all asset classes. Client portfolios are created using our equity and fixed income selections, complemented by a wide array of global strategies across all asset classes. Client portfolios are created using our equity and fixed income selections, complemented by a wide array of global strategies that provide valuable exposure to alternative and unique asset classes.
5. TAX MANAGEMENT. The impact of taxes could keep investors from reaching their financial destination. That’s why FMN completed extensive research into the effect of taxes on an investment portfolio. As a result, we focus on tax management to help potentially enhance after-tax returns.
6. RISK MANAGEMENT. As an active manager, we vigilantly monitor each portfolio to help ensure it functions as it should. At FMN we have a long-term investment approach designed for performance within a strong risk management framework. Investing today means accepting the fact that company-specific attributes are at times outweighed by economic, political, and market dynamics. During such periods where stocks and bond values can be materially distorted from fundamental values we pursue *tactical changes within client portfolios.
*Alternative investments, including hedge funds, commodities, and managed futures involve a high degree of risk, often engage in leveraging and other speculative investments practices that may increase risk of investment loss, can be highly illiquid, are not required to provide periodic pricing or valuation information to investors, may involve complex tax structures and delays in distributing important tax information, are subject to the same regulatory requirements as mutual funds, often charge higher fees which may offset any trading profits, and in many cases the underlying investments are not transparent and are known only to the investment manager.
*Rebalancing can entail transaction costs and tax consequences that should be considered when determining a rebalancing strategy.