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Investment Philosophy
 At Back Bay Financial Group, long-term focus is placed on diversity, cost consciousness, and tax efficiency. A qualified team of wealth managers and support staff works with each client to assess and prioritize financial goals. Portfolio design is based on four basic investment models and is customized for each client, balancing the rate of return and risk. Portfolios implement several types of investments, including low cost index funds and exchange traded funds, quantitatively passive funds from Dimensional Fund Advisors and actively managed funds selected for their consistent style, performance record and low expenses.
Diversity. A well-diversified portfolio is an essential component of successful investing and is best achieved by investing in a variety of asset classes with growth and value style characteristics. The allocations to each asset class are determined by the anticipated long-term return, correlation to other asset classes and anticipated volatility. Portfolios include an allocation of fixed income securities that depend on the risk tolerance of the client. Alternative investments such as domestic and international REITs and absolute return funds provide further diversification that attempts to lower overall portfolio volatility without sacrificing returns. There are no direct investments in limited partnerships or private equity. Instead, exposure to alternative asset classes is achieved by investing in mutual funds selected for their liquidity, marketability and transparency.
Cost Consciousness. A special emphasis is placed on minimizing costs that reduce investment returns. Portfolios are exposed to a wide variety of asset classes with institutional shares of mutual funds that have lower expenses than equivalent retail funds. Clients often receive transaction discounts as a result of longstanding institutional relationships.
Tax Efficiency. Tax efficiency is achieved by maintaining long-term focus and avoiding frequent buying and selling. Special attention is given to minimizing capital gains taxes by using techniques such as locating tax-inefficient funds in tax-deferred accounts, investing in municipal bonds where appropriate and utilizing tax-managed funds. A customized approach to each client ensures portfolios are constructed and managed with clients’ individual tax considerations in mind.
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