How does QAM achieve such high returns while increasing stability?
QAM's strategies are composed of 3 investment components, for your short-term security and long-term security. Each portfolio has different amounts of the three components, offering different levels of short-term and long-term security. Refer to the articles "Which is Safer for Retirement: Bonds or Stocks?" and "How Can You Maintain Security at all Times?" for an explanation of this approach. Click on the three component links to see detailed performance information.
QAM puts your peace of mind at a very high priority. Refer to the following articles for details about how this is achieved: "Q3 2004: Diversification at Work!", "Can the S&P 500 be dangerous?", "Should you sell your declining stock?", "When are Stocks Too Risky?", "When are Bonds Too Risky?", "The Imaginary Line" and "The Imaginary Line in Retirement".
Long-Term Component
Designed to provide high long-term growth. It is also the main source of retirement income that is available to you at all times, including some of the best and worst times in the stock market. Income of 5%, growing with inflation, is planned whether you live to be 100 or 1,000. Tests show this portfolio to be substantially more conservative than typical portfolios.
This is a diversified portfolio of over 6,000 companies, of different sizes, maturities and industries all over the world. Ownership is through the Dimensional Fund Advisors (DFA) Mutual Funds, and QAM considers them to be the best mutual funds for constructing investment portfolios. The Dimensional Funds are similar to index funds, but allow for much broader diversification into desirable companies. This includes smaller companies and companies selling at bargains (low price compared to earnings or book value).
Short-Term Component
Designed to provide income that is there for you at all times. This short-term security is obtained using short-term high-grade bonds from various governments and high-rated companies all over the world.
Extended-Term Component
Designed to provide substantial long-term growth. This portfolio is used to supplement the Long-Term Component for longer time horizons. It may also be used if you have lower income needs of up to 3% of your portfolio. This income is available for you at all times, including some of the best and worst times in the stock market. The income grows with inflation, and should be there whether you live to be 100 or 1,000.
This is a diversified portfolio of over 1,000 companies, of different sizes, maturity levels and industries all over the world. It is another disciplined approach that focuses on long-term holding of companies. Ownership is also through the Dimensional Fund Advisors (DFA) Mutual Funds.
Costs & Taxes
QAM understands that any cost for your investments directly affects the results. QAM increases your purchasing power at all times, by reducing various components of your costs. These include competitive advisory fees, low mutual fund expense ratio, no commissions or sales charges, no load mutual funds, negotiated large block transactions, low turnover (minimal transactions within mutual funds), minimal trades of mutual funds, proprietary smart rebalancing, low trading costs, no annual broker fees.
Your taxes are minimized across the board: within the mutual funds; when money shifts into-, out of- and between the holdings; and on the portfolio level. Some of the principles include, tax-managed mutual funds with minimal short-term gains and loss harvesting, low turnover, minimal sales, rebalancing using incoming money and a proprietary smart rebalancing algorithm.