Meet a Persistent Winner
InvestIn exclusively identifies investments having achieved top quartile persistence in consecutive years. Doing so makes these investments much more likely to persist as a winner in go-forward years.
The Investment Discovery podcast is a weekly series that interviews top performers across a broad array of investment Factors from risk, return, and risk-adjusted return statistics to Factor combinations.
Some winners are mutual fund managers while others are hedge funds or ETFs. Each podcast investigates what the Factor is – the Sortino ratio for example – and why it’s important for due diligence and investment selection.
The investment manager then presents the philosophies and processes resulting in persistence (Note: persistence is the opposite of luck; it is intentional.)
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This week’s top 10 Factor winner: Sharpe Ratio
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The next three episodes:
- Sortino Ratio
- Up Capture Ratio
- Volatility + Return
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Setting the Stage for Factor Investing
Kirk Loury, InvestIn’s CEO and podcast host, explains how factor investing addresses an advisor’s business challenges, particularly differentiating investment solutions for top clients. Factor investing sits at the intersection of passive and active investing and enables structural extensions with any investment type especially stocks that offer the lowest cost portfolio solution with the highest customization path including ESG for clients’ impact investing desires.
Understanding Factors and the Importance of Factor Persistence
Kirk Loury describes the different types of factors and how they relate to specific results be they investment statistics as well as financial datapoints and ratios. Then, factor persistence is defined as a high-value due diligence and investment selection input.
Integrating Factor Investing with Wealth Planning
Kirk Loury sets a wealth planning approach that values a client’s needs, wants, and aspirations across short-, mid-, and long-term investment horizons. These horizon-based portfolios each have investment objectives and associated factors target specific results.
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Winners Persist in Winning
Across a comprehensive test of 20,000 investments from mutual funds to stocks to ETFs to hedge funds, a significant majority of investments never achieved a top-quartile ranking in any year (i.e the in-sample period). And, those without such an achievement, zero (0%) had a probability of achieving a top 25% ranking in an out-of-sample year. Losers persist in losing.
In contrast, investments with two-, three-, and four-year top-25% in-sample persistence had a much higher likelihood of staying in the top quartile in the out-of-sample years and an even higher chance of being in the top 50%.
The more years’ persistence, the higher resulting probabilities.
It’s a true achievement to be a Persistent Winner. Learn more about the importance persistence plays in high-impact due diligence, investment selection, and portfolio building.
