Investment Approach & Philosophy

Our investment team assumes responsibility for all portfolio decision making, including tactical asset allocation, manager or security selection, risk management, and monitoring within agreed upon guidelines. This scope is consistent with an Outsourced Chief Investment Officer (OCIO) model, which has gained significant momentum in recent years. Our continual oversight and real-time portfolio management help ensure that client assets remain invested in accordance with portfolio objectives, which is particularly important when markets are in turmoil or at inflection points. Unlike other fully discretionary or outsourced investment firms that often commingle their clients’ assets into collective pools, BEC uses separately managed accounts, which offer clients more flexibility to access their capital.

BEC utilizes index-tracking exchange traded funds (ETFs) rather than active managers or traditional mutual funds to achieve asset allocation targets, which reduces investment costs, improves transparency, and eliminates the manager and security selection risks associated with active management. Data from the past 20 years confirms that most active managers have struggled to keep pace with the returns of their passive benchmarks due to behavioral biases, market timing, cash positions, and management fees. Because ETFs offer many compelling advantages, the ETF market has enjoyed strong growth over the past decade and currently accounts for 25% of the U.S. listed fund market.

BEC’s investment approach embraces diversification across numerous asset classes, market cap segments, investment styles, geographies, and sectors in an effort to achieve targeted investment returns with lower volatility through a market cycle. We have developed long-term strategic weights for all the asset classes that we incorporate. These strategic asset allocation targets reflect several preferences based on their demonstrated outperformance over many decades, but we maintain the flexibility to neutralize or further emphasize them based on market conditions.

At Blue Edge Capital, we believe that asset allocation is the most critical determinant of long-term investment performance and prioritize this in our investment process. The BEC Investment Committee employs forward-looking tactical tilts to our long-term strategic asset allocation to manage risk and to capitalize on market opportunities. Our dynamic portfolio management is based on macroeconomic trends as well as fundamental, relative, and technical measures in the financial markets. Our tactical asset allocation decisions are governed by strict policy ranges by asset class, which helps ensure proper diversification, prudent risk management, and timely portfolio rebalancing. Our trading activity tends to be gradual, and annual portfolio turnover is generally modest compared to most actively managed strategies.