Rethink Your Investment Philosophy

Equity Concepts overarching investment philosophy is based on the idea that minimizing portfolio volatility leads to long term success.

you win by avoiding big losses.

As a firm we understand the debilitating impact of portfolio losses on the practical needs and goals of any portfolio. We also believe that traditional portfolio construction is no longer sufficient to protect investment assets from market volatility. More sophisticated measures are now required for effective risk management. Equity Concepts’ focus on alternative solutions as a means to protect assets from market volatility can be a key element to long term preservation and growth.

Bull Bear

Take a closer look

A closer look at the chart below demonstrates that there are significant periods of time with little to no market growth. Since individuals don't invest over 100 year periods, it is vital to understand how to invest in all types of markets.


Modern Diversification

Instead of focusing on allocation through asset classes, the focus at Equity Concepts is to diversify client assets across specific management styles. We call them the Four Quadrants. This is a similar method for achieving non-correlated portfolio returns already adopted by many large institutions and endowments. Quadrant managers are given access to multiple asset classes and are instead defined by their overall objective for growth and the methodology by which they achieve such growth.

  • Traditional

    Traditional managers are normally characterized by market based growth and higher volatility, but good performance in upward trending markets. While these managers are typically correlated to equity markets our managers are permitted to invest across asset classes to seek superior risk adjusted returns. This unconstrained approach not only enhances the opportunity for return, but also elevates the overall diversification of the portfolio as a whole.

  • Absolute Return

    Absolute return is defined in our model as any manager that seeks capital preservation as their primary goal. These managers are also permitted to invest across asset classes with the goal of capital preservation and total return but typically focus on varying types of fixed income and options strategies. The objective of absolute return is lower portfolio volatility and outperformance in difficult equity markets.

  • Alternative

    Alternative managers seek to achieve non-correlated returns through the use of private investment options or traded positions with historically non-correlated performance. By separating the driver of the return from traditional exchanges altogether, managers have the most effective means to protect against market pressures. Private equity, private debt, real estate and energy are all examples of alternative strategies.

  • Protection

    Safety and security is the top consideration in this quadrant. Investments are chosen to protect portfolio assets and mitigate potential market losses. Structured notes, banking instruments and varying insurance products offer less opportunity for growth in exchange for contractual protection against loss in down markets. This type of protection is foundational to portfolio construction.

Emphasis and Access to Alternatives

Large trusts, endowments and institutions traditionally have had significant allocations to domestic equities and other long-only asset classes within their portfolios. Throughout the last decade those allocations have shifted overwhelmingly to alternative investments as the preferred means to mitigate market based risk and maximize potential opportunity.

Most individuals can't invest like an institution.


  • typical individuals

    Individual Pie Chart
  • typical institutions

    Institution Pie Chart

Source: National Association of College and University Business Officers and Commonfund Institute. Data include asset allocations for U.S. Higher Education Endowments and Affiliated Foundations with assets under management of at least $1 billion in fiscal year 2011. Alternative strategies include: private equity (LBOs, mezzanine, M&A funds, and international private equity); marketable alternative strategies (hedge funds: absolute return, market neutral, long/short, 130/30, event-driven and derivatives); venture capital; energy and natural resources (oil, gas, timber, commodities and managed futures); and distressed debt. Note: The exact portfolio allocations for the individual investor portfolio above are for demonstrative purposes only and are not supported by any one piece of literature.

"Our focus on alternative investment research and access to industry leading managers provides our clients with the expertise required to make the shift to more modern and effective portfolio management techniques."

-Michael Thaler, Managing Partner and Co-Founder