What We Do
Building Durable Investment Portfolios
At Montis, we believe that conventional investment wisdom can prove very costly for investors.
The Importance of Durable Portfolios
What investors lose is time
One of the industry’s oldest sayings is that you haven’t lost anything until you sell. But when a portfolio takes years to recover from a major decline, something has been lost: time. Those are years that were supposed to be spent compounding toward retirement and other goals.
That is why portfolio construction should begin with the amount of risk a financial plan can reasonably carry.
Our Philosophy — Risk-First Investing
Understanding risk sets the foundation for generating lasting returns
We do not simply focus on portfolio returns. We are equally focused on how much risk was required to achieve those returns. The highest returning mutual funds often garner a lot of press at year-end, but no one reports on how much risk they took to achieve those returns, and no one reports a year or two later when many of those funds suffer devastating losses because they weren’t “durable”. Success in compounding wealth means much more than picking this year’s “winners” — it means picking a winning approach over your entire investment horizon. Downside volatility disrupts compounding and damages investors’ ability to reach their ultimate goals. “Durable portfolios” are designed to significantly mitigate downside volatility.
Beyond Conventional Wisdom
Stocks and bonds alone do not provide sufficient diversification
Conventional wisdom has led investors to believe that they can succeed with traditional stock and bond portfolios, but as markets have evolved, investors are discovering that is no longer true. Far too often stocks and bonds move in the same direction — not diversifying each other, but magnifying investor pain during down markets.
Some investors, frustrated with the low returns and lack of diversification, have concluded that they should strictly invest in stocks, which only serves to further magnify their risk and leave them vulnerable to the next devastating market decline, further damaging their ability to compound wealth.
Our Solution
What we mean by a durable portfolio
We believe the answer lies in building what we call “durable portfolios” — portfolios that are built with the realization that there is an ever-increasing range of asset classes available that can offer compelling returns, beyond just stocks and bonds, as well as being less correlated with conventional portfolios, with the objective of providing strong returns and weathering all market environments with much less downside risk.
Too many investors believe that diversification means sacrificing expected returns by reducing portfolio risk, but that does not have to be the case. We describe diversification as, once you have decided how much risk is appropriate, using a range of uncorrelated asset classes to achieve as much expected return as we can given that level of risk.
“That is a key benefit of durable portfolios — less time spent recovering losses, more time spent compounding wealth.”
Start Here
Let’s talk about the risk in your portfolio
A durable portfolio starts with the amount of risk your financial plan can carry. That is the first question we would want to understand.