Prosperity Capital Advisors

Investment Fundamentals

Five Fundamental Principles

The following five fundamental principles guide our portfolio development and investment management decisions by our investment committee:

1. Application of our investing philosophy based on Nobel Prize-winning evidence:

tilting allocations to pursue higher expected returns.

Factor 1: Equity has higher expected risk and return characteristics than fixed income over time.
Factor 2: Small company stocks outperform large company stocks over time.
Factor 3: Value stocks outperform growth stocks over time.
Factor 4: Profitable companies outperform less profitable companies over time.

Guided by these ideas, our portfolios tilt towards the asset classes that have historically proven to provide a higher expected return.

2. Diversification to reduce exposure risks:

holding a broad global mix of securities, asset classes, sectors, and countries. While slightly overweighting towards allocations supported by our evidence based active management strategies, each of our portfolios represents a broad global diversification to maximize global opportunity and avoid overexposure or reliance on niche performance.

3. Own the market:

maintaining holdings of a wide range of securities from all asset classes that meet the factors derived from our evidence based active management strategies. By casting a wide net, our portfolios avoid individual stock or fund selection within each asset class. Instead, we focus on owning the entire market as a whole to further enhance diversification.

4. We can only control what we can control:

structuring portfolios to minimize the impact of controllable factors. Because there are many things that can impact the overall performance of a portfolio—some we can control, and some we cannot—we focus on insulating our investments from the things we can. This includes taxes, fees, time horizon, overexposure to a single sector or over-weighted in any single investment.

5. Lead with the plan, not the product:

offering comprehensive financial solutions rather than singular investment products. At Prosperity Capital Advisors, we see our investments as part of a total holistic planning experience. We work to provide the tools and resources needed to create optimal financial solutions for American families. These efforts include consideration and coordination of investments, insurance, taxes, and legal planning.

We provide this evidence based active management strategy to individual investors through a series of portfolios consisting of exclusive Dimensional Fund Advisors (DFA) mutual funds distributed through our network of independent investment advisors. Each portfolio offers tax- and fee-efficient investments that are managed based on decades of Nobel Prize-winning financial, economic, and consumer behavior research. Click here to learn more about our portfolios.