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To harness predictive power, Mason takes a ‘sensible, logical’ approach

Mason Investment Advisory Services, Inc. hosted leaders from Avantis Investors for an educational session this week, part of Mason’s ongoing efforts to enhance knowledge of what market factors are likely to drive return on investment.

During a two-hour session, members of Mason’s team peppered Avantis Chief Investment Officer Eduardo Repetto, Ph. D.; Chief Investment Strategist Philip McInnis and Vice President & Investment Specialist Alex Jenkins, CFA with questions about the philosophy behind the Avantis investment strategy that is designed to increase expected rate of return.

“How do you decide your rankings are right?” asked Loizos (Lee) Kapnisi, CFA CFP® and a senior financial planner with Mason, adding that funds that consistently perform well over time are not always the funds that were the most recent top performers.

Mr. McInnis said Avantis uses an academically supported, market-tested framework rooted in the principles of value investing, and that each of the 5 initial Avantis equity strategies had surpassed $1 billion in assets under management at the three-year mark, which was in September 2022.

While academics and practitioners have documented “more than 400 factors” that can impact an investment’s valuation, Mr. McInnis said, Avantis focuses on the characteristics that valuation theory predicts would be most relevant to consider in its approach to evaluating companies: a company’s equity, profits and current price.

Avantis investment managers take the three data points, Mr. McInnis said, and express them as two ratios, equity by price and profits by equity. The combination of these two ratios produces a basic framework from which to compare investment opportunities.
“While there is more complexity in executing these strategies, this is a sensible, logical foundation for how we build portfolios,” McInnis said.

Is your investment strategy built to realize your long-term investment goals? Call 703-716-6000 or email to speak with a Mason advisor today.

Past performance is not indicative of future results. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person.

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