What’s the difference between investment philosophy and an investment philosophy statement?

An investment philosophy is an integrated, nuanced, cultivated set of beliefs about how you approach investing. An investment philosophy statement is a summary of those beliefs.

A philosophy statement is like a resume. It highlights major points and provides a few proof statements without going into too much detail. The goal is to trigger a potential reviewer’s interest in you and a desire to learn more. That’s what an investment philosophy statement should do—give someone who is evaluating your investment philosophy a good grasp of your basic beliefs and provide entry points for a more meaningful conversation to develop.

Effective communication often calls for short, punchy statements. Yet many investment philosophies are based on complex ideas and cannot be easily reduced to an elevator pitch without losing content. How can your investment philosophy statement do justice to your underlying philosophy without becoming a full-blown treatise? We propose three criteria for writing a philosophy statement:

  • It should state your beliefs about the markets, not about your investment process, style or portfolio objectives.
  • It should make a logical argument and avoid things like non sequiturs, presenting myths as facts or other logical fallacies.
  • It should be as simple as possible, but no simpler—providing enough content about your philosophy to constitute a starting place for in-depth exploration.

To learn more about the benefits of investment philosophy, we invite you to read our recent paper, “Rethinking Investment Philosophy,” by John Minahan and Thusith Mahanama.* Just click on the link below to read an executive summary.


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