About Boston Harbor Investment Management

William F. Sharpe, 1990 Nobel Prize winner for his theory of risk and return, precisely states our belief about the work to be done before offering any investment strategy to our clients: "Although it is always perilous to assume that the future will be like the past, it is at least instructive to find out what the past was like."

We are about using our proprietary Microeconomic Theory of the Firm to create validated systematic investment strategies. All of our strategies will show our clients hypothetical performance over market cycles using the scientific method of first developing a hypothesis and then rigorously back-testing that theory using SEC Form 10-K fundamental data.

Our first investment strategy, SELECT 40 (40 U.S. Large-Cap stocks), went live on April 1, 2013. The live composite returns have closely tracked the hypothetical returns for that period. Since inception April 1987 through 2022, a hypothetical $10,000 invested in SELECT 40 grows (net of management fee and transaction cost of 1.21%) to $421,747 as compared to $287,069 for the S&P 500 Total Return Index.

SELECT 40 Total Return Strategy provides our clients with the opportunity to profit from one of the greatest anomalies in finance: the long-term success of low-volatility and low-beta portfolios. Contrary to basic finance principles, high-beta and high-volatility stocks have long underperformed low-beta and low volatility stocks. Over 1968-2008, low-volatility and low-beta portfolios offered an enviable combination of high average returns and small drawdown’s. This outcome runs counter to the fundamental principle that risk is compensated with higher expected return.¹

Our Strategy’s risk-adjusted returns are about double the S&P 500 Total Return Index over the past two decades. The Strategy’s phenomenon of higher than market returns for less than market risk was confirmed in 2011 by the independent third party research of Malcolm P. Baker, Robert G. Kirby, Professor of Business Administration, Harvard Business School.

Importantly, our Strategy, based on fundamental analysis of SEC Form 10-K, leaps the gap between academic research and value-added investment performance by selecting efficient portfolios of low-volatility and low-beta stocks that deliver higher than market returns at less than market risk.

Our goal is to provide Strategy portfolios of well-managed, healthy, large market capitalization companies, with a high probability of sustainable earnings that can continue to deliver higher than market returns at lower than market risk for our clients.²

The Strategy’s DNA is confirmed by the chart below. The SELECT 40 Large-Cap Stock Low-Volatility Low-Beta Investment Strategy can be downloaded by selecting OUR STRATEGY & FACT SHEETS:

Return vs. Volatility Comparison April 1987 Through December 2022
SELECT 40TR vs. S&P 500TR

SELECT 40TR RETURNS ARE AUDITED HYPOTHETICAL TOTAL RETURNS WITH DIVIDENDS REINVESTED
NET OF 1.21% MANAGEMENT FEE AND TRANSACTION COSTS.

PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RETURNS

¹ Baker, Malcolm, Brendan Bradley and Jeffrey Wurgler, “Benchmarks as Limits to Arbitrage: Understanding the Low-Volatility Anomaly,” Financial Analysts Journal, Volume 67, Number 1, 2011, CFA Institute.

² Our SELECT 40 hypothetical returns from April 1, 1990 to September 30, 2016 plus our Microeconomic Theory of the Firm for stock selection have been audited by Ashland Partners & Company LLP.