The Proof Is Clear for This Investment Approach

We’ve devoted considerable time to explaining evidence-based investing (EBI) because we have conviction that this approach helps provide our clients the greatest odds of achieving their ideal futures.

Thank you for joining us on this journey that started with the publication of our whitepaper, “Evidence-Based Investing: A Scientific Framework for the Art of Investing.”

Evidence is literally the name of the game here, and in this final blog of the series, we’ll offer a summary of our analysis and how evidence-based investing will continue to evolve.

In Summary

At the center of the EBI approach is the success of you, the investor. The evidence-based strategy we use for investing applies similar principles as those practiced in the field of medicine.

Our whitepaper contains many supporting statements, case studies, and data to bolster our methods while also identifying what doesn’t work. Those less successful strategies include:

  • Market timing
  • Active stock-picking
  • Persistence of past performance

Consider another important question related to the power of diversification (a common theme throughout this EBI journey).

Question: Can broadly diversified portfolios improve long-term returns and reduce risk?

Answer: From our standpoint, a broadly diversified portfolio is a better mousetrap for long-term investors than conventional approaches. Depending on individual goals and risk tolerance, this approach can result in various mixes of stocks, bonds, and alternative asset classes. A portfolio that seeks diversification both across and within asset classes has the potential to be more resilient across a variety of market environments.

Evidence: The evidence we show supports the success and strengths of a systematic, rules-based approach to investment management. The hypothetical illustration below highlights the difference in growth of wealth between a Simple 70/30 Index Portfolio and a Broadly Diversified 70/30 Index Portfolio over a nearly 50-year period.

A Small Difference In Returns Can Make a Big Difference in Wealth Growth of $10,000 1973-2019

Relationships and Results

At the heart of any successful investment strategy is the relationship between client and advisor. This is no less true with evidence-based investing, which continues to evolve.

Here’s a quick refresher on our four key diversification strategies:

  • Enhance bond diversification.
  • Harness global stock opportunities.
  • Tilt towards compensated factors.
  • Alleviate risks through select alternative investments.

Armed with evidence and logic, we believe investors can be confident that EBI will work for them for many years to come.

For more information, download our EBI whitepaper or consult with your financial advisor.

About Savant Wealth Management

Savant Wealth Management is a leading independent, nationally recognized, fee-only firm serving clients for over 30 years. As a trusted advisor, Savant Wealth Management offers investment management, financial planning, retirement plan and family office services to financially established individuals and institutions. Savant also offers corporate accounting, tax preparation, payroll and consulting through its affiliate, Savant Tax & Consulting.

©2021 Savant Capital, LLC dba Savant Wealth Management. All rights reserved.

Savant Wealth Management (“Savant”) is an SEC registered investment adviser headquartered in Rockford, Illinois. Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments and/or investment strategies recommended and/or undertaken by Savant, or any non-investment related services, will be profitable, equal any historical performance levels, be suitable for your portfolio or individual situation, or prove successful. Please see our Important Disclosures.

Please Note: Limitations of Index discussion. Savant has provided the Index presentation solely to demonstrate the benefit of rebalancing. Different types of investments and/or investment strategies or allocations involve varying degrees of risk and volatility, and at any specific point in time, or over any specific time-period, any investment or investment strategy can and will suffer losses, at times substantial losses. Therefore, it should not be assumed that the future performance of any specific investment or investment strategy, including the investments and/or investment strategies or allocations recommended and/or undertaken by Savant, will be profitable, equal any historical performance level(s), or prove successful. Please Also Note: The referenced graphs at 13a, 13b, and 14a do not reflect the rebalancing, composition or performance of any current Savant investment strategy.