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Time Tested Qualitative Strategies

Most people are familiar with what a mutual fund account is: investors’ assets are pooled into one account then each investor owns shares of the “fund.” When investor assets are pooled, the amount can grow into the billions of dollars and the fund company must progressively add more holdings to absorb the increasing amount of assets in the account.

It’s quite common for mutual funds to contain several hundred stocks and this increasing amount has a dilutive effect on mutual fund returns. No longer can the fund manager focus on the best 20 or 50 investments to choose from, and this has a significant long term impact on your returns as an investor.

OP does not pool investment accounts. We directly manage your account and, since we don’t have to contend with increasing holdings into the hundreds to accommodate incoming assets, we can focus on the best 20 to 50 holdings for your account.

The chart below is a visual representation of how stock investments can be ranked according to factors that tend to drive investment performance. In this case, OP clients would own investments represented by the turquoise bar whereas the typical large-cap “Index” mutual fund is relegated to the red bar on the far left representing the S&P 500 Index.

If given the choice, where would you prefer your investments to be?