Our Investment Approach

At Seven Hills, our investment philosophy is driven by a commitment to our core values and a dedication to delivering exceptional results. By integrating the Seven Values into our evidence-based approach, we build a robust framework that not only seeks financial success but also fosters trust and long-term relationships. Here’s how our values shape our approach:

Evidence-Based Approach

Our investment strategy is firmly rooted in empirical research. The SPIVA studies highlight two critical insights about the investment industry:

  1. Most active managers underperform their benchmarks. Over the 23-year history of SPIVA scorecards, an average of 64% of all active large-cap U.S. equity funds underperform the S&P 500 in a given year.
  2. Persistent outperformance by active managers is rare. Among active large-cap U.S. equity funds with top-quartile performance as of December 2019, not a single fund remained in the top quartile over the next four years.

These two facts combine to produce a fundamental truth: the market itself has the highest probability of delivering superior returns over the long term. Over the past 10 years, 87% of large-cap equity managers have underperformed the S&P 500.

By using low-cost Exchange Traded Funds (ETFs) tracking the major benchmark indices, we ensure broad market exposure and cost efficiency. These ETFs provide transparency, liquidity, and tax advantages, making them an ideal core holding in our portfolios. By leveraging empirical research, we are able to cut through the noise and focus on what truly matters – delivering consistent, long-term value to our clients.

Long-Term Strategic Asset Allocation

We begin with a deep understanding of each client. We recognize that everyone’s financial situation, goals, and risk tolerance are unique, so our long-term asset allocation strategies are customized to meet these individual needs. Our strategies are built on comprehensive research and analysis of the long-term relationships between the economy and various asset classes. By diversifying across a wide array of asset classes – including equities, fixed income, real estate, commodities, private markets, and other alternative strategies – we aim to provide stability and growth through the various phases of market and economic cycles. Research shows that diversified portfolios can reduce risk and enhance returns over the long term. Our tailored strategies not only aim to meet your immediate financial needs but also to secure your long-term financial future.

Short-Term Tactical Adjustments

To maximize returns and manage risks, we make tactical adjustments to our asset allocation based on current market conditions. These adjustments are guided by our rigorous analysis of economic indicators, investor sentiment, and market trends. For instance, during periods of market volatility, we may increase our allocation to defensive sectors or high-quality bonds to protect our clients’ portfolios. Conversely, in a bullish market, we might capitalize on growth opportunities in emerging markets or technology sectors. Our portfolio management committee meets weekly to review our macro assumptions and determine the optimal adjustments. This dynamic approach ensures that our clients’ portfolios remain agile while staying firmly aligned with their long-term goals.

Leveraging Alternatives

In addition to traditional asset classes, we integrate alternative investments into our portfolios to enhance diversification and potentially improve returns. Alternatives such as private equity, hedge funds, and real assets often have low correlations with traditional asset classes, offering unique sources of stability and growth. For example, during periods of equity market downturns, investments in real estate or commodities can provide a hedge against volatility. By carefully selecting and managing these alternative investments, we aim to mitigate risk and optimize the long-term performance of our clients’ portfolios. Research has shown that a well-diversified portfolio that includes alternative investments can achieve superior risk-adjusted returns over time.

Leveraging Alternatives

At Seven Hills, we don’t pretend to be smarter than the market. Prudence is our core value, and we rely on sound principles in everything we do. Our approach is simple and consistent: good asset allocation, a robust risk management process, and a realistic perspective. This combination yields great results for our clients. By focusing on the investment opportunities with the strongest risk-reward profile, we avoid unnecessary complexity. Our repeatable and consistent process ensures reliable outcomes for our clients, without relying on the ‘sizzle’ many in the industry claim to possess.

By integrating these values into our investment approach, we create a robust framework that not only aims for financial success but also builds trust and fosters lasting relationships. At Seven Hills, we are committed to ensuring that our values create value for you.

Join Us on the Path to True Wealth

Experience the benefits of working with a team committed to your health and wealth management. Contact us today to learn more about our comprehensive approach and how we can support your journey towards health and wealth longevity.