Our Investment Approach
Our investment strategy is built upon years of expertise and a strong conceptual framework that emphasizes focusing on the things that can be controlled. Explore the five concepts of our consistent and disciplined investment philosophy.
1. Perform Due Diligence
In choosing a mutual fund, Barnett Financial certainly considers past returns. However, in performing our investment due diligence we tend to focus more on process and governance issues that we think are a better indicator of sustained performance.
2. Minimize Investment Fees
In buying a mutual fund, higher fees do not necessarily signal a better fund. On the contrary: Other things being equal, higher costs result in lower investment returns. The manager of a mutual fund must deliver enough returns to compensate for the fund’s expense ratio before chalking up the first dollar of return to shareholders.
Barnett Financial seeks investments that have lower fees relative to their peers. Moreover, as an institutional investment firm, we have access to institutional share classes that tend to have lower expenses than those available to individual investors.
3. Minimize Tax Liabilities
It doesn’t take a financial planner to recognize that taxes can take a huge bite out of investment returns, particularly in taxable accounts. Barnett Financial works to control taxes in non-retirement accounts by using tax-efficient investments, such as tax loss-harvesting opportunities, capital gains avoidance and asset location strategies.
For those clients seeking capital preservation, we typically use municipal bonds since municipal bonds, unlike corporate bonds or treasuries, are tax-exempt.
Unlike many larger firms that require new clients to sell all of their investments and use only those securities the firm recommends, Barnett Financial is sensitive to the tax implications of selling securities when implementing a new portfolio.
4. Design a Portfolio that Works Together
An investment portfolio should be more like a tapestry than a collection of baseball cards — the threads must work together to achieve the desired effect. For each of our clients, we weave a portfolio of investments that are designed to work well together and that reflect your unique circumstances and needs.
5. Protect Against Emotional Decision-Making
Barnett Financial does not use market-timing techniques, but instead uses a disciplined buy-hold-rebalance approach. Study after study shows that frequent traders and market timers earn returns significantly lower than market benchmarks. Such investors tend to respond emotionally to volatile markets, which ultimately results in buying high and selling low.