COMPOUND ANNUAL INVESTMENT STRATEGY RETURNS (1980 – 2018)
Source: AthenaInvest, Inc.
Investment strategy is the way portfolio managers go about buying and selling securities to generate returns. For active equity mutual funds, this process is described in the fund’s prospectus under the heading “Principal Investment Strategies.” Each of the groups of managers above focus on different criteria. For example, Future Growth managers want to identify companies that are poised to grow revenues and earnings into the foreseeable future. Profitability managers, on the other hand, are looking for companies that generate large cash flows, pay dividends, and operate to deliver maximum cash back to shareholders. Most of the companies that are attractive to Future Growth managers would not look good to Profitability managers and vice-versa. For more information about AthenaInvest’ s Strategy Framework, see https://athenainvest.com/company/academic-foundation/strategy-framework/.
As the chart above shows, not all investment strategies are created equal. The best-performing strategy over time has been Future Growth, which has outperformed the worst-performing strategy, Risk, by nearly 6% per year. But different strategies do well at different times, which is why it makes sense to diversify among the top six performing strategies in a long-term growth portfolio. Knowing what strategies do better over the long-term can also help investors stay allocated to them in periods of underperformance.
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IMPORTANT INFORMATION AND DISCLOSURES
The information provided here is for general informational purposes only and should not be considered an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. It should not be assumed that recommendations of AthenaInvest made herein or in the future will be profitable or will equal the past performance records of any AthenaInvest investment strategy or product. There can be no assurance that future recommendations will achieve comparable results. The author’s opinions may change, without notice, in reaction to shifting economic, market, business, and other conditions. AthenaInvest disclaims any responsibility to update such views. These views may not be relied upon as investment advice or as an indication of trading intent on behalf of any AthenaInvest representative.
You are solely responsible for determining whether any investment, investment strategy, security, or related transaction is appropriate for you based on your personal investment objectives and financial circumstances. You should consult with a qualified financial adviser, legal or tax professional regarding your specific situation. Investments involve risk and unless otherwise stated, are not guaranteed. Past performance is not indicative of future performance.