Premier’s investment philosophy is grounded in a rigorous, evidence-based approach. Our methodology is the result of decades of academic research and practical experience, designed to capture the full potential of global markets while effectively managing risk. 

Below, we’ll explore common investment strategies and how our approach represents a thoughtful evolution of passive investing principles, tailored to meet the unique needs of our diverse clientele.

Active Investing

Active investing is an approach where fund managers attempt to outperform the market by selectively picking stocks. While this aggressive strategy may seem appealing at first glance, it comes with several drawbacks:

  • Emotionally Driven Decision-Making: Active managers often make decisions based on market trends or gut feelings, leading to reactionary choices that may not align with long-term investment goals.
  • Concentrated Risk: As Ginger Weber, CFPⓇ and Premier President, points out, active managers typically focus on a limited number of companies — sometimes as few as 30. This concentration increases the risk of significant losses if a few companies underperform.
  • High Costs: Actively managed funds typically charge higher fees to cover the costs of research and frequent trading. These fees can significantly eat into returns over time.
  • Cash Drag: Active funds often keep a portion of their assets in cash to handle redemptions or to wait for buying opportunities. This idle cash isn’t actively working for investors and can drag down overall returns.
  • Chasing Returns: Many active managers fall into the trap of chasing past performance, where they see what did well historically and buy more of it. This often leads to buying high and selling low, contrary to successful investing principles.                          
  • Lack of Consistency: The performance of actively managed funds is highly variable. A fund that outperforms one year may significantly underperform the next, making it difficult for investors to maintain a consistent long-term strategy.

Index Funds

Index funds are investment vehicles that aim to track and replicate the performance of a specific market index. 

Ginger explains, “Index funds offer a simple way for investors to gain exposure to a broad range of stocks or bonds in a single asset class, typically at a lower cost than actively managed funds.”

Index funds offer several benefits over actively managed funds. They tend to provide more long-term stability, as broadly invested funds typically have more consistent results compared to actively managed funds, which can experience increased volatility due to their tendency to concentrate in particular positions or industries. Index funds are also generally more tax-efficient due to their low turnover, generating fewer taxable events.

Moreover, passive index funds typically keep minimal cash reserves, ensuring that all your money is working for you. They also maintain a consistent mix of assets based on their target parameters, providing specific risk and return characteristics that are balanced against the other portfolio components. This helps investors effectively manage inherent risk.

However, traditional index funds still have limitations. They can be subject to reconstitution, where changes to the index can lead to problematic trading activity. Additionally, while they offer broad market exposure, they may not capture the full potential of the market or adequately manage risk for individual investors’ needs.

Premier’s Approach

As part of our Fiduciary+ commitment, we’ve developed an investment approach that utilizes structured asset class portfolios. This allows us to capture the advantages of a passive strategy while including asset classes that historically offer higher returns over the long-term. Each portfolio is tailored to align with the specific goals and needs of each client.

Our strategy goes beyond indexing. Ginger explains, “We’re not doing pure indexing. Indexes are made up benchmarks by the industry. But the Dow Jones Industrial Index, for example, is only 30 companies.” Instead, our approach involves investing in over 10,000 companies globally, providing true diversification.

Additionally, we’re embracing the industry trend towards Exchange-Traded Funds (ETFs). ETFs offer several advantages over traditional mutual funds, including greater cost efficiency and tax benefits. We’re actively incorporating ETFs into our client portfolios to leverage their benefits, continuously striving to optimize long-term performance while minimizing unnecessary costs and taxes.

We believe that being proactive rather than reactive to market movements is crucial for long-term investment success. Our approach emphasizes steadiness and discipline, avoiding hasty — and harmful — reactions to volatile markets. 

This principle is so fundamental to our practice that one of our founders, Ron Ross, Ph.D., wrote “The Unbeatable Market” to explain it in depth. In his book, he shares how an index-type approach to investing helps to manage most forms of investment risk. The one inherent risk we can’t eliminate is market risk. As an investor, you will always face some level of market risk, but as Ron explains, it is a risk that tends to be well compensated in the long run. Many of the other investment risks that investors endure are often uncompensated risks, meaning they are risks usually not worth taking. 

Dimensional Funds

Premier has cultivated a strong relationship with Dimensional Fund Advisors, one of the largest investment firms in the United States that applies academic research to practical investing. Dimensional constructs asset-class funds that go beyond simple indexing, offering a full range of equity and fixed income strategies designed to target higher expected returns. It is a nuanced approach that aims to capture the benefits of indexing while addressing some of its shortcomings. 

Our relationship with Dimensional is built on a mutual commitment to evidence-based investing and shared values, not financial incentives. “No money passes between us and Dimensional,” Ginger says. “We have no obligation to use them — our only obligation is to our clients. We choose Dimensional because their approach aligns with our philosophy and benefits our clients.”

Moreover, we invest for our team and our company retirement plan in the same Dimensional portfolios as our clients, demonstrating our confidence in the strategies we recommend. We literally put our money where our mouth is. 

Empowering Your Financial Journey

The entire team at Premier firmly believes that strategic market exposure, diversification, and cost-efficiency offered by structured asset-class portfolios are essential for wealth accumulation and long-term financial peace of mind.

Grounded in our values of integrity, authenticity, and client centricity, we focus on providing consistent, reliable results that can offer clients stability and peace of mind. Learn more about our diversified investment strategy here.