Sound Investment Philosophy

because results matter

We believe achieving good returns in financial markets requires independent thinking, a suppression of ego and a systematic approach to managing capital. At SS&A we emphasize all three.

Independent thinking means we work diligently to identify investments (in the stock and bond markets)  with undiscovered value. Often we have a variant perception of an investment that is based on looking beyond the immediate circumstances and evaluating a situation over the longer term.

Suppressing our ego means that our managers are willing to change their minds when new information comes to light. Our ability to adapt to new information and to act on that information often requires that we let go of our previous reasons for owning a security. This need to adapt to new information demonstrates a key value of our firm: We believe the desire to be right all of the time can get in the way of being right over time.

Systematically investing simply means we follow our discipline in up and down markets. Following a discipline and sticking to that discipline can be very difficult when volatility is high and bad news is abundant. It is psychologically difficult to remain disciplined during times of extreme volatility. The consensus view, which is driven primarily by short term considerations, can be hard to resist. However the consensus rarely reflects the long term fundamentals. This is where we believe we add significant value.

We believe:

• Prices don’t always reflect the true value of an underlying business
• A 3 to 5 year investment horizon is better than a 3 to 5 day investment horizon
• Market timing is a long term failure process
• Price paid and time horizon are two of the most important factors in successful investing
• Periods of misperception usually take longer periods of time to unwind, but often there are substantial rewards for those who are patient
• Attractive investments can be found anywhere, in multiple asset classes or in multiple industries – consequently we do not limit our search by industry, style or capitalization

Investing with Individual Securities

For those clients who prefer using individual stocks for their equity allocation we employ a strategy that leverages our in house portfolio management experience. This “core” approach employs a value methodology to create a portfolio of individual securities that offer potential return, in our view, that exceeds what the market can return over a given period of time, with less risk. These portfolios typically are diversified between 35 and 45 companies that meet our proprietary criteria. This approach offers many advantages over an individual mutual fund: greater tax efficiency and control, improved risk control, lower costs and the advantage of customizing a portfolio to your individual needs.

Investing with Fixed Income Securities

At SS&A, we use fixed income securities, or bonds, as an effective diversification tool in an investment portfolio. We work diligently to avoid risk in bonds by looking for certain, expected returns. Bonds typically pay a fixed coupon (interest) and return the par or “face” amount of the principal on a predetermined date, called maturity.

History tells us that bond prices are much less volatile than stock prices. We believe it is prudent that as investors near retirement or simply move to shorter time horizons, fixed income securities play a more important role in portfolio allocation.