Charles Schwab & Co., Inc. has been
selected by Campbell Asset Management,
LLC as the primary custodian for
Campbell Asset Management's clients.
Having Charles Schwab as custodian
for client assets allows us access to
comprehensive services to help us
serve our clients.

These materials have been independently produced by Campbell Asset Management, LLC. Campbell Asset Management, LLC is independent of, and has no affiliation with, Charles Schwab & Co., Inc. ("Schwab") or Charles Schwab Bank. Schwab has not created, supplied, licensed, endorsed, or otherwise sanctioned these materials nor has Charles Schwab & Co., Inc. conducted any independent verification of the facts and representations underlying these materials.

Investment Process

We like to explain our investment process in terms of three fundamental investment decisions. These decisions, in the order of importance are Asset Allocation, Sector Weighting, and Individual Security Selection.

                    

ASSET ALLOCATION is the most important investment decision one makes, as this will have the single biggest impact on long-term investment returns. With the asset allocation decision, we can control an investment portfolio’s risk and return characteristics. By including fixed income and real estate investment trust (REITs) in an individual investment portfolio, we can raise the income and lower the risk of our client’s portfolios.

Historical Market Return Data (1976 - 2008)

	Stocks	Bonds	REITs
Biggest Annual Gain	37.4%	32.6%	47.6%
Largest Annual Loss	-37.0%	-2.9%	-41.8%

Source:  Barclays & NAREIT as of 12/31/08

 

SECTOR WEIGHTING is the next step in the investment process, and is the second most important investment decision. Choosing the right sectors to invest in or to avoid is ultimately much more important than picking individual securities. Our sector weighting decision is based on market sectors that we have identified as attractive for investment.

Factors that affect these decisions include the current economic environment, industry fundamentals, and secular trends that are unique to an individual sector. Furthermore, sectors are not exclusive to equities but are also important to both Fixed Income and REITs.

 

INDIVIDUAL SECURITY SELECTION involves picking individual stocks, bonds and REITs, and is the final investment decision in our investment process. This part of the investment process has the least impact on a client’s portfolio return and is the last step in our investment process. Ironically, most investment decisions are based on individual security selection which once again has the least impact on a portfolio’s longterm risk and return characteristics.

INVESTOR POLICY STATEMENT (IPS)
We believe that a written investment plan is common to every successful investment portfolio. The guiding document for our client’s portfolios is an Investor Policy Statement (IPS). This document is a written blueprint that describes a client’s investment goals, including income, risk, and return. An Investor Policy Statement, in combination with a written financial plan, is essential in an effective financial strategy.