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An Academic Approach

We strongly believe in employing unbiased academic research in our investment strategies, rather than the typical approach of actively-managed mutual funds and separate accounts.
The report card on an active approach illustrates the difficulty money managers have in outperforming "appropriate" benchmarks.  Our approach eliminates the element of "manager risk", or risk of selecting a poor money manager.  Also, ample evidence concludes that excessive volatility can have a detrimental effect on long-term investing, and we employ strategies to reduce this risk, yet still allow for growth over time.

Institutional Investments

RMI has access to special classes of institutional investments unavailable to most retail clients. These types of institutional investments, which include equity (stocks), fixed income (bonds), and various alternative investment class assets, are used to develop sophisticated portfolios tailored to each investor’s need.

Passive Investing

Over long periods of time, few actively managed portfolios can outperform low-cost passive investments.  This is evidenced and supported by extensive academic research.  Over shorter timeframes, some money managers have exhibited superior returns, but often this temporary performance fails as time progresses.  Much of investing today by retail investors and even investment advisors is driven by hindsight – past performance is the driver.  To identify excellent managers before they become superstars is the downfall of professional investment advisors, as well as the retail public.  Selecting a manager because of stellar performance is frustrating, as past performance is rarely duplicated.  We believe that identifying the right mix of asset classes for each client and investing thoroughly in those asset classes is far more
rewarding.

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Diversification

We have learned the value of diversifying portfolios into as many as 8-10 different major and sub-asset class investments.   This strategy lowers volatility and increases portfolio growth over long periods of time.  For example, a truly diversified portfolio utilizing our approach has been demonstrated to produce returns 2-4% greater than a typical portfolio created by stockbrokers, trust companies and separate account money managers who often invest solely in a single asset class of U.S. large-cap stocks, rather than a fully-diversified portfolio.

Asset Class Selection

We believe stock market returns are enhanced by structuring portfolios that incorporate smaller-companies and low price-to-earnings (P/E) ratio companies into the overall mix.
There is strong academic support that these two asset classes have demonstrated higher returns over long periods of time dating back to the middle of the 1920’s.  Exposing a portfolio to these two factors (the size-effect and style-effect) to enhance returns over the long-term is often ignored, overlooked, or simply missed by the market timing strategies of Wall Street.

Rebalancing

The sage advice of buying low and selling high is a key element in our strategy to enhance returns.   Our strategy is to create a target allocation for each asset class.  Over time, as the actual allocations drift (or deviate from our targets), we rebalance the portfolio back to our targets.  Typically, we sell-off higher performing assets and purchase lower performing
assets - thus, rebalancing automatically buys in at a lower price and sells asset classes at higher prices.

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Low Expenses

We keep investment costs and management expenses low, which translates directly into higher returns for our clients.  Institutional class no-load mutual funds utilizing
sophisticated passive strategies translate into more return for the client.

Lowering the Tax-Bite

Wall Street for the most part ignores the tax effect of trading.  Passive investment funds are naturally suited to saving taxes, as turnover rates are low.  Less internal trading inside a fund means less capital gains and a greater after-tax return for our clients.  We are also excited about newer institutional products that have been engineered to reduce the need to constantly rebalance portfolios.  These products also reduce transaction costs – another drain on return.

Socially Responsible Investing (SRI)

RMI can accommodate clients seeking an investment approach more in line with their values. Today, there are a greater number of funds that screen for a number of characteristics in line with client objectives.  We maintain the same level of diversification for SRI clients and rebalance portfolios periodically.

Investment Policy Statement (IPS)

Every investment client receives an IPS that describes the investment philosophy and investment management procedures to be utilized for the funds, as well as the long-term goals and objectives of the investor.  As investor objectives or needs change, so does the IPS.