Philosophy


Successful investment management outcomes are the result of both science and art—of technique and professional judgment. Ultimately, it is the investment research organization—its professionals and processes—that become a proxy for the investment component of a fiduciary process.

SIRG’s investment philosophy is based on the proposition that skill exists among active managers. The best approach to identify manager skill is to apply the same framework of active portfolio management. That manager skill or alpha is a function of forecasting skill, implementation efficiency, and the manager’s range of opportunities. Through a framework that combines manager selection with time-tested principles of modern portfolio theory, a better risk-adjusted portfolio can be achieved.

Animating Principles:

The investment team within Prudential’s Strategic Investment Research Group is tied together by a common set of beliefs that drive their approach toward investment consulting and portfolio construction. The principles are well grounded, academically proven beliefs that help our clients achieve their goals and objectives. Those principles are:

  • Risk is related to reward.
  • Asset allocation helps explain performance. The ability of investors to achieve a long-term performance advantage depends on the right asset allocation strategy fulfilled by appropriate asset managers.
  • Active management can add value. Markets trend toward efficiency, but are not efficient.
  • Certain performance results are persistent.
  • No single firm possesses all the talent across investment management disciplines.
  • Portfolio costs—fees, trading market impact, taxes—have a meaningful impact on portfolio result.