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Investing

A prudent, well-structured investment process is more likely to incur lower costs, make fewer mistakes, and be less susceptible to market swings. 

At Allodium, we believe that investors are best served with objective advice that is based on academic research from highly respected sources.

We believe that investors can benefit by adopting a long-term investment time horizon and then developing investment plans that will allow for them to participate in the growth of the capital markets over time.

Patience, we believe, is a virtue that can reward the informed investor.

Investment Approach

We believe in the science of investing. In our view, investors should focus on the few things that they can control: diversifying their portfolio, reducing expenses, minimizing taxes, and sticking to a disciplined investment plan. Our unbiased approach to investing leads us to manage investment risk with broad diversification. We diversify both by asset class and by individual security.

We prefer to implement asset allocation strategies using low-cost investments that are tax efficient. We encourage our clients to hold low-cost funds and to maintain their asset allocation strategies during periods of market volatility.

Allodium’s investment approach is logical, transparent, and based on academic insights. We follow a scientific, evidence-based and disciplined investment method that helps investors to make investment decisions.

Our investment approach allows the investor to control the important investment policy decisions while delegating the details of portfolio management to professionals. 

“CEFEX certification is like the Good Housekeeping Seal of Approval
for advisory firms and nonprofits.”

— David Bromelkamp, Founder

Investment Process

A fiduciary is a person or organization that is entrusted to act on behalf of another. The primary role of a fiduciary is to conduct a prudent investment management process which includes the selection, monitoring and de-selection of investment managers.

The Allodium investment decision-making process is based on the fiduciary best practices outlined in the Prudent Practices for Investment Advisors handbook. This summary of fiduciary best practices for investment advisors was written by Fi360,®  a Broadridge Financial Solutions company, and reviewed by the American Institute of Certified Public Accountants (AICPA).

What are the advantages of working with a CEFEX-certified fiduciary? The benefits to clients include a higher probability of enhanced portfolio outcomes with increased transparency and oversight through documented and disciplined investment processes.

Fi360

Fi360 is a source of insight and education, and the investment industry’s leading advocate of all aspects of fiduciary responsibility. The Center for Fiduciary Studies, founded in 1999, has developed and maintained the Prudent Practices™ that are the foundation upon which Fi360 was built, and continues to serve as the standards-setting body for Fi360.

The Center for Fiduciary Studies offers the Accredited Investment Fiduciary® (AIF®) designation program which provides investment advisors with the training they need to employ the “gold standard” of fiduciary excellence in their business practices.

CEFEX

CEFEX® Centre for Fiduciary Excellence, a Broadridge Financial Solutions company, a subsidiary of fi360, is a certification organization that works closely with industry experts to provide comprehensive assessment programs to improve the fiduciary practices of investment advisors. CEFEX-certified firms adhere to a standard representing the best practices in their industry.

In August of 2016, Allodium became the first investment firm based in Minneapolis to become CEFEX certified for fiduciary excellence.

Investment Philosophy

These are the core beliefs about investing that guide our investment process:

Markets Work

Markets have a history of rewarding investors for the capital they supply. Companies compete for investment capital and millions of investors compete for the most attractive returns. Markets quickly incorporate information from this competition into security prices.

Diversification

Diversification by asset class provides investors with some control over portfolio risk. Diversification by security enables them to capture broad market forces while reducing the uncompensated risk associated with individual securities.

Investors Versus Speculators

Traditional investment approaches strive to beat the market by taking advantage of perceived pricing “mistakes” and attempting to predict the future. These approaches could prove to be costly and futile. 

Focus on Your Plan

An investment plan based on the science of investing frees you to focus on other things. Let the markets work for you by taking advantage of sensible, well-diversified, low-cost portfolios backed by research.

We prefer to implement asset allocation strategies using low-cost investments that are tax efficient. We encourage our clients to hold low-cost funds and to maintain their asset allocation strategies during periods of market volatility.

Investment Strategy

Investment strategy or “portfolio construction” is the tangible manifestation of an investment philosophy. The investment decision-making process requires that an investor choose which asset classes and investment vehicles to include when forming a portfolio strategy.

Most long-term investors develop an investment strategy to address three common goals:

  1. manage investment risk and preserve capital
  2. provide growth of capital or corpus
  3. establish a future income stream from the portfolio

Many of the largest academic institutions in the United States use evidence-based investment concepts founded on Nobel Prize winning ideas to develop their investment policy, manage investment risk and implement their investment strategies.

College investment committees tend to be thoughtful and deliberate as they aspire to fulfill their fiduciary obligations under the law. They diversify by asset class to manage investment risk and then implement their investment strategies with low-cost institutional mutual funds. This is referred to as the Endowment Model because many large colleges use this method to manage their endowment funds.

Allodium believes that many investors should consider using the academically based science of investing to develop thoughtful and prudent investment strategies like a college endowment fund committee. We have adopted many of these evidence-based strategies into our investment strategy. We want to model the prudent investment practices of large institutional investors—what we believe to be some of the most appropriate practices of fiduciary investment management.

Learn More

Investment Philosophy

  • Allodium Investment Committee
  • A Better Investment Experience
  • Investment Beliefs
  • What is Evidence-Based Investing?

Investment Process

  • Investment Benchmarks
  • Selecting Benchmarks
  • Manager Screening
  • Green is Go

Investment Discipline

  • Common Mistakes
  • Investor Bias
  • Behavioral Bias
  • 20 Cognitive Biases
  • Political Bias
  • Sharpen Your Focus

Investment Strategy

  • Optimal Structure
  • Investment Generalists
  • Smart Diversification
  • Endowment Approach
  • Endowment Model

Investing

  • Why Alternatives?
  • Direct Indexing
  • Hedged Equity
  • Managed Futures
  • Diversified Alternatives
  • Liquid Real Assets

Investment Approach

  • Asset Allocation Strategy
  • Rebalancing
  • Investment Approaches
  • DFA Mutual Fund Landscape
  • Investment Risk

Let’s Meet

We invite investors with portfolios over $1 million to a
complimentary “Get Acquainted” meeting with one of our
financial advisors.

Contact Us

Contact Us