Our investment committee meets six to nine times per year. The committee currently consists of three voting members and several non-voting members. One of our goals for 2016 is to have four voting members by year-end.
We have a revolving calendar of investment decisions that we review. These include, but are hardly limited to the:
- allocation across different regions of the world (United States, developed international countries, emerging markets, etc.)
- extent of our “tilt” or emphasis on smaller and cheaper companies
- level of interest rate risk and credit risk we target in our bonds
- use of privately versus publicly traded investments
- split between real assets, such as real estate, and traditional stocks
- specific managers we choose for each asset class
- impact of taxes on our investments
As a result of this process, and the last two bullet points in particular, we have recently decided to exit out of one of the investments that most of you have in your portfolio, the “O’Shaughnessy All Cap Core I” mutual fund, symbol OFAIX. The fund emphasizes the cheaper (“value”) and smaller companies of the U.S. market, which are the companies from which we expect higher returns than the overall market. We have always known that the fund would buy and sell more securities than our other funds, which alone would generate transaction costs, including taxes. But we expected that the fund would employ a vigorous program of selling off enough of its losers in order to realize losses that could offset the taxes already mentioned. After careful analysis, we have uncovered that the “tax drag” from the fund on your money is not justified by the actual returns so far, or the expected returns going forward. Your advisor will review your specific tax situation with respect to the O’Shaughnessy fund before approving your exit.
It is important to know that, even as long-term, relatively “passive” investment advisors, we consider every aspect of your portfolio to be continuously up for review. This also means that if an investment appears in your portfolio for numerous years, that it hardly has been forgotten about but rather it has been methodically reviewed numerous times and (explicitly or implicitly) we have voted to maintain the position each time.
As a final note, our emphasis on smaller and cheaper (“value”) companies has not changed, and will continue to be captured through a new mix of the other funds that are currently in the portfolios.
