Investment Philosophy

We believe financial markets are not efficient as described in modern portfolio theory although they are very competitive. The continued growth of funds invested in passive index and ETF strategies is expected to create enhanced opportunity to add value through bottom-up fundamentally based security selection.

We believe taking a longer-term view on investing helps avoid traps generated by market noise.

One Fund = One focus = One investment philosophy

We seek inefficiencies in a broad range of equity and fixed income markets.

We also believe that the future is not knowable. Our response is to construct a portfolio able to withstand a variety of scenarios rather than optimizing for one expected future. 

The Fund is actively managed and significantly different from any index. Extending one’s investment horizon to maturity for bonds and 5 to 10 years for equities allows for the evaluation of securities based on longer term fundamentals rather than short term noise. 

Portfolio manager interests are aligned through personal investment of significant portions of their net worth.

Risk management is integral to all aspects of Level 3’s investment philosophy. Exposure to downside risk is as or more important than upside potential. Investment success is frequently a function of what one does not do.

We believe that the distinction between Growth and Value styles of investing is frequently a false dichotomy. At Level 3, we consider ourselves to be investors with a long-term value orientation, but growth is always considered an important attribute.