Investment Philosophy

At Barnett Financial, our investment philosophy is straightforward: "Focus on the things that can be controlled." Thus, our investment philosophy is focused on the following four core areas.

• Fee Management
• Tax Management
• Diversification and Asset Allocation
• Buy-and-Hold Investing

Fee Management

When you buy mutual funds, high costs don’t mean you necessarily get a better fund or higher returns. In fact the contrary is true: other things being equal, higher costs result in lower investment returns. The manager of any mutual fund has to deliver enough returns to compensate for a fund's expense ratio before chalking up the first dollar of return for the fund's shareholders. The higher a fund's costs, the higher that hurdle is.

When choosing a mutual fund, Barnett Financial considers a wide range of factors, but among the most important is the fund’s fees relative to its peers. Moreover, as an institutional investment firm Barnett Financial can buy institutional share classes of certain mutual funds which have lower expenses than those available to most individual investors.

Tax Management

It doesn't take a financial planner to recognize that taxes can take a huge bite out of investment returns, particularly in taxable accounts. We rigorously strive to control taxes in non-retirement accounts each year by having tax efficient investments, taking advantage of tax loss-selling opportunities and allocating tax inefficient investments into retirement accounts. Our philosophy is particularly beneficial to those clients with low basis stocks. Many larger firms require new clients to sell all their investments and use only those they recommend, which can have disastrous tax consequences. We work with a clients existing portfolio to develop the appropriate mix of assets going forward. In addition, we review your tax return and work with your CPA to implement other tax saving strategies. We proactively provide your CPA a Tax Report on investments each year.

Diversification and Asset Allocation

Diversification is an important strategy investors can use to offset the impact of some types of investment risk. To diversify the investments of its clients and reduce the associated risk, Barnett Financial selects:

• assets from a variety of asset classes;
• assets from a variety of geographic regions;
• assets from a variety of business sectors; and
• a variety of securities or funds within an asset class

The appropriate asset allocation is subjective and varies according to each client's investment goals, risk tolerance, time horizon and tax situation.

Barnett Financial puts a special emphasis on asset allocation and adjusts those allocations over time as investment horizons and circumstances change.

Buy-and-Hold Investing

Study after study shows that frequent traders and market timers earn returns that are significantly lower than market benchmarks. One reason is that such investors tend to respond emotionally to volatile markets, which results in buying high and selling low.

Barnett Financial does not use market-timing techniques and instead uses a disciplined buy-hold-rebalance approach with an investment mixture appropriate for each of its clients.