Our Approach

Investment Philosophy

Investment professionals who have successfully completed the intensive three year course of study and exam series to achieve the Chartered Financial Analyst designation are taught that there are generally two approaches to investing.  One approach, often called “active management,” involves the fundamental analysis of securities both individually and in various groups (i.e. industries, etc.) with the goal of identifying mistakes in pricing of various securities (i.e. stock picking) and/or determining favorable entry and exit points with respect to different asset classes over time (i.e. market timing).  The contra approach to investing, often referred to as “passive management,” introduces the concept of Modern Portfolio Theory which puts forth the idea that due to extensive competition markets are efficient.  This means that the price of securities at any given time incorporates all publicly known information about them, and therefore, the prices of public securities are fair.  As a result of efficient pricing, investors are much better served by building a diversified portfolio amongst multiple asset classes (i.e. indexing).  Which approach is better?  Luckily, there is a growing body of real world performance information available that can help us with that question.

Over the past several decades, there has been a significant increase in the number of active investment professionals managing money and the number of published indexes that track underlying market performance.  As comparisons are made between active manager performance and the benchmark index performance, the evidence is overwhelmingly clear that it is extremely difficult for professionals to consistently outperform their benchmark indices over time.  Furthermore, those active managers that may have periods of “outperformance” end up doing so by virtue of luck/statistical chance as opposed to any meaningful demonstration of skill. Trying to predict who will be the next “hot” money manager is a fool’s game. Said differently, every investor has a choice: embrace a passive investment strategy that will efficiently and reliably capture the returns of the capital markets over time or gamble that a particular active investment strategy will match or surpass the passive strategy. The odds are tilted heavily against the active bet. Asset class/passive investing is consistent with what we know about how free and fair markets function. Active management is not.

Our goal at Ascension Wealth Partners is to provide our clients with an approach that will maximize returns, minimize risk, and replace stress and uncertainty with confidence and vision.  We want our clients to achieve a higher level of investment success.  When you consider the academic science, the real world evidence, and our own experience with clients over the years, it was clear to us that our investment philosophy would be firmly anchored in the bedrock of Modern Portfolio Theory.  The academic principles that follow create the framework that guides our portfolio construction:

  • Markets work.  Capital markets do a good job of fairly pricing all available information and investor expectations about publicly traded securities.
  • Diversification is paramount.  Comprehensive, global asset allocation can neutralize the risks specific to individual securities.  Diversification washes away the random fortunes of individual stocks and positions your portfolio to capture the return of broad economic forces.
  • Risk and return are related.  The compensation for taking on increased levels of risk is the potential to earn greater returns.  Successful investing also means not only capturing risks that generate expected return but reducing risks that do not.
  • Portfolio structure explains performance.  The asset classes that comprise a portfolio and the risk levels of those asset classes are responsible for most of the variability of portfolio returns.