The World According to Windham

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If you are suffering from too much news (“infobesity”) and too many dire predictions (“calamity fatigue”) then the annual Windham Global Solutions client conference last week would have been a welcome break.  earth_money-1It was for us.  Windham, our asset allocation and risk management advisor, had a full menu of meaty topics over two days.  Here are some highlights.

Windham is a key service provider for us. Its software, which allows us to customize diversified global equity, bond and alternative investment portfolios for each client, is an essential and unique resource. With Windham’s client base composed primarily of big institutional investors, we feel very fortunate to have access to its tools. The annual conference always reminds us how smart and innovative the Windham team is.

Among many other activities, Windham tracks more than 300 indexes in its database, dating back to inception, from the S&P 500 to the emerging markets bond index.  This wealth of data provides the perfect vantage point from which to view the history of investing and allows us to construct and personalize each portfolio according to goals, risk, and most importantly, likelihood of outcome.  Windham is unique.

How big is the world?
At $177 trillion, the investment world is full of surprises, especially for many American investors who tend to use the S&P 500 as a proxy for “the market.” As Windham points out, stocks comprise less than a third of all investments, and US stocks amount to less than a third of all stocks.

The charts below remind us that diversification is not just about owning a wide variety of US stocks; it’s about owning equities, fixed income and alternative asset classes here and abroad. Windham’s software models guide us in doing so.

Windham_World_AllocationThe Keynote
Mark Kritzman, Windham founder and CEO, gave the keynote address. Mark described the continuing evolution of portfolio management – away from a traditional “investment policy” approach where managers set investment percentages based on the old standard 20th Century 60/40 model to a much more flexible “ideal model.”  The ideal model – what we often refer to as goal-based investing – starts with the end in mind, maximizes the likelihood of achieving goals, and incorporates individual needs, obligations, priorities, opportunities, desires and aspirations.

The ideal model aims for success on an individual client basis, the only metric that matters, we’re sure you’ll agree.

Other topics
There was much to learn and practice over two days.  Other topics presented were Robin Greenwood’s (Harvard professor) Expectations question. Do expectations predict?  Not reliably or consistently, he found.  We also attended workshops on factor analysis (what is really influencing your portfolio) and cash flow and wealth analysis (money in, money out, money left over).

All in all, it was a fascinating opportunity to stay at the cutting edge of evidence-based (as opposed to prediction-based) investing.


This article may include forward-looking statements. All statements other than statements of historical fact are forward-looking statements (including words such as “believe,” “estimate,” “anticipate,” “may,” “will,” “should,” and “expect”). Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Various factors could cause actual results or performance to differ materially from those discussed in such forward-looking statements.

Nothing in this article is intended to be or should be construed as individualized investment advice. All content is of a general nature. Individual investors should consult their investment adviser, accountant, and/or attorney for specifically tailored advice.

Any references to third-party data or opinions are listed for informational purposes only and have not been verified for accuracy by the Adviser. Adviser does not endorse the statements, services or performance of any third-party vendor without specifically assessing the suitability of a third-party to a client’s or a prospective client’s needs and objectives.

An investment cannot be made directly in an index.

All opinions expressed during the Windham conference are those of Windham and/ or it’s speakers and do not necessarily reflect the opinions and investment decisions of Osbon or its employees.

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