Evidence over prediction. Costs over excitement.
Most investment underperformance does not come from picking the wrong fund, it comes from violating one of the principles below. So we wrote them down. Publicly. So clients can hold us to them.
1. Costs are the only return you control.
Every euro paid in TER, wrapper fees and advisor compensation is a euro that does not compound for you. Markets are uncertain. Cost is not. We optimise costs first and let the market do the rest.
Carhart (1997), Sharpe (1991): Fund costs are the most reliable predictor of long-term net returns.
2. Diversification is the closest thing to a free lunch.
Owning the global market, thousands of companies across regions and sectors, removes the risk of any single company, industry or country sinking your plan. Concentration may pay off; relying on it is gambling, not planning.
Markowitz (1952): Modern Portfolio Theory established diversification as the only risk reduction available without giving up expected return.
3. Time horizon decides everything.
The same portfolio is reckless over 3 years and conservative over 30. We size equity exposure to the actual money-needed dates, not to how the market feels this quarter.
Siegel (1994, 2014): Equity drawdown probability collapses materially as holding periods extend beyond 15–20 years.
4. Tax-awareness, not tax-obsession.
We use the German tax framework where it pays off (Teilfreistellung, Sparer-Pauschbetrag, wrapper deferral when the case is real). We do not tilt portfolios into worse products just to harvest a tax break that does not survive the fees.
EStG §20 + InvStG: The framework matters; how a product interacts with it matters more than headline tax rates.
5. Evidence over forecasting.
We do not have a 'house view' on the next 12 months, and we do not pretend the people who do. Decisions are based on long-term, replicated evidence, not on macro storytelling.
Fama (1970, 2013): Strong-form market predictions consistently fail to outperform low-cost passive exposure after fees.
6. Behaviour is the biggest hidden cost.
The average investor underperforms the average fund, by selling at lows and buying at highs. The advisor's most valuable job is often to prevent the client (and the advisor) from doing something clever.
DALBAR QAIB studies (annual): Behaviour gap of 1.5–4% p.a. across decades of US equity-fund investors.
7. No market timing. Ever.
There is no published evidence of any retail (or institutional) timing strategy that survives costs and tax over multiple decades. We will not start trying to be the exception.
Sharpe (1975): A timer would need to be correct roughly 70% of the time to beat buy-and-hold after costs. Almost nobody is.
8. Build it portable.
An expat's portfolio has to survive a move. We prefer wrappers and depots that are transferable, taxable in a predictable way, and not locked behind German-only structures unless the case is exceptional.
DBA-Netz (OECD model): Outcomes after relocation often depend more on the wrapper than on the underlying funds.
What we will not do
- We will not pretend to time the market.
- We will not concentrate your portfolio in a 'high-conviction' theme.
- We will not recommend a product whose cost we cannot reproduce from the contract.
- We will not change the long-term plan because of last quarter's headlines.
How this gets implemented
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Educational content describing our investment principles. Not financial, tax or legal advice. Past performance does not guarantee future results. Individual recommendations follow a personal consultation.