Earnings-Quality, Ownership, and Cost Equal Results
At Linden Thomas & Company, we believe superior results are closely linked to three factors: earnings quality of holdings, direct investor ownership, and controlled investment cost. All three of these factors guide us in building indexes which outperform traditional market-cap index funds, as well as Yield-Focused Fixed Income Portfolios that tend to produce better results than bond products.
Earnings Quality – We believe that while stocks can go up in the short term with few earnings, in the long term, earnings quality is always going to drive results. There is no better example of this than the 2001 dot com bust. Unlike traditional index funds, where stocks are removed for falling below market cap value, our institutional index earning overlay allows us to identify, and invest in, only those companies that meet a higher earnings standard.
Ownership – Unlike mutual funds or ETFs, our equity and bond portfolios give each investor the benefits of direct ownership, eliminating the impact of small investor behavior and herding. Linden Thomas & Company clients have total ownership, control, and transparency. As a result, they can manage and tailor assets specific to their growth, income, and tax needs. This can’t be achieved with pooled products.
Cost – The challenge in evaluating costs is this; many investors really don’t know the real cost of investing. When it comes to products such as mutual funds, ETFs, and annuities, most investors don’t understand that often each carries expense ratios, trading costs, spreads on trades, and herding impacts. Most of the investment industry advisors fail to disclose these costs, which are in addition to the advisor fee.
At Linden Thomas & Company, we believe the cost is not only important to the results, but also to transparency. Our equity and fixed income portfolios are built and managed to minimize cost and provide full transparency. That is why our clients never question the impacts of cost.
Proof that earnings quality, ownership, and cost matter!