Coburn Barrett follows a long-term investment philosophy that favors holding periods of three years and beyond. Our strategies are based on the tenets listed below. While many of these are well known and widely understood, it is our position that properly applying them gives Coburn Barrett a clear advantage. Specifically, the GLI fund’s returns are in the top 0.1% of all trackable funds over the last fifteen years (source: Bloomberg).

  1. Asset allocation is the major driver of long-term returns

    Selecting individual securities, and the fundamental research it requires, is not attractive on a cost benefit basis.

    Coburn Barrett invests in entire asset classes rather than individual securities.

  2. Real arbitrage opportunities are too rare to be the focus of long-term investing

    Relative mis-pricing is rare, and by definition temporary. Many funds already chase these few opportunities with mixed results.

    Coburn Barrett does not focus on arbitrage.

  3. Portfolio theory is especially effective when applied across asset classes

    Diversification reduces risk more than it reduces returns, and the only choice an investor faces is how much risk to take.

    Coburn Barrett attempts to maximize diversification within and across asset classes.

  4. Low turnover means higher returns

    Every asset purchase or sale is a cost. Frequent market timing, directional bets, discretionary trading and regular strategy changes are unlikely to produce superior risk-adjusted returns on a sustained basis.

    Coburn Barrett keeps turnover low.

  5. The risk return ratio is the only meaningful measure of investment performance

    Risk is a measurable quantity; additional risk must be compensated for by additional return.

    Coburn Barrett measures its performance against benchmarks and securities of similar risk.

  6. Steady risk levels strongly benefit investors

    Many funds change their risk exposure significantly over time, loading investors with unwanted exposure or depriving them of opportunities for return. Even worse, traditional risk management too often ignores non-normal distributions; as a result catastrophic losses occur.

    Coburn Barrett’s proprietary risk management targets a specific annualized volatility and maximizes returns at that level of risk. (The GLI Fund is targeted at the risk level of broad equity index like the S&P 500 or the MSCI global) Our extreme diversification shields investors better from disasters than would traditional risk management.

  7. Higher fees do not mean higher returns

    High performance fees reward fund managers for carrying excessive risk when a bet is won, whereas when the bet is lost the investor carries the downside risk alone

    A fund manager with several funds, each holding an opposite position in the market, has guaranteed a performance fee for himself, directly implying the investors as a group are guaranteed to pay a fee without any guarantee for returns.

    Performance fees create, by definition, this asymmetry of interests between manager and investor.

    Coburn Barrett’s does not charge performance fees. Our flat fee structure reflects our belief that the long-term risk-adjusted return to the investor is the only relevant measure of performance. In addition, it is the best way to ensure alignment of investors’ and managers’ interests.