Posts by Wesley R. Gray, Ph.D.


















A Framework for Investment Manager Selection: Stick to the FACTS

September 16, 2014

Used car salesmen types are everywhere, especially in the asset management business. What defines the used car salesman? Used car salesmen are often focused on selling something—anything on their lots that has four wheels—rather than identifying the right vehicle for the client. The same holds true with the asset management business. Some asset management salesmen just want to sell something—anything, regardless of its suitability. Alpha Architect’s experience working with family offices in the dual role of consultant and investment manager has given us the opportunity to see a lot of indecipherable marketing materials and esoteric investment strategies over the years, neither of which appear to be in the best interest of the investor. We’ve always sought a simple framework that would facilitate a quick evaluation of any strategy that came through the door, but nothing really existed. Necessity is indeed the mother of invention: We developed our own framework for determining strategy selection and assessment. Our method is based on a few simple concepts, which should be clearly understood within the context of any investing approach, regardless of objective. In the end, choosing investment opportunities simply comes down to the FACTS.

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The Alpha Architect Value Proposition

September 16, 2014

Our mission is to empower investors through education. Our experience in academia and working with ultra-high-net-worth individuals, in the dual role of consultant and investment manager, has culminated in the development of four core beliefs that permeate everything we do: 1) We believe in Systematic Decision-Making, not ad-hoc decision-making. Disciplined and repeatable processes are more reliable than discretionary judgment, 2) We believe in Evidence-Based Investing, not story based-investing. Rigorous, data-driven research drives success; stories drive sales, 3) We believe in Transparency, not black-boxes. We are committed to having investors understand what we are doing, 4) We believe in Win-Wins, not unsustainable relationships. We are committed to a business model that prioritizes client success. Finally, our assessment of the competitive investment management landscape has led us to the conclusion that active managers often overcharge for the expected alpha they deliver. Net of fees/costs/taxes, investors are usually better served via low-cost passive allocations. While this is largely true today, we want to disrupt this calculus and deliver Affordable Active Alpha.

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