Philosophy

I believe, and history has proven, that Investment Management is all about RISK Management. To the extent you can Identify, Quantify, Measure and Manage, both the Internal (to market) and the External (to market) RISKS, you will be able to give clients the returns they seek, commensurate with the level of RISK they are willing to tolerate.

        —John Scott

The ‘Smartest’ Beta? Beta is a RISK measurement based on a market or objective index. Without the index benchmark there is no applicable beta calculation. Smart beta is the optimization of the risk/reward behavior of a market index usually by changing the weights. By changing the weights methodology the goal is to enhance returns or reduce volatility or both. Given a liability objective it is critical to create a custom liability index (CLI) as the proper benchmark. The “smartest beta” portfolio is the portfolio that best matches and achieves the true client objective with the least amount of risk and cost. Risk is best measured as the uncertainty of achieving the objective. Cost is the amount required to fund the objective.

Ronald J. Ryan