Evidence Based Investing – The process of systematically reviewing, appraising and implementing academic research findings to aid the delivery of optimum investment solutions to investors.
ebi’s Investment Philosophy is built around the core principles of:
Investing is a (less than) zero-sum game
Every out-performer or winner must be offset by an under-performer or loser. As all investors constitute ‘The Market’, the average investor will receive market returns, before costs. In the real world, costs in their widest sense make a substantial impact on returns, making investing a significantly less-than-zero-sum game; implying that the average investor will receive below the market returns by the sum of these costs.
Not putting all your eggs in one basket and spreading investments into different building blocks, or asset classes, is intuitively easy to accept.
Underpinning the idea of diversification is a sophisticated mathematical theory known as portfolio ‘mean variance optimisation’. Once you know the returns, risk (annualised standard deviation) and the relationship between the return series of every pair of asset classes in the portfolio (correlation), it is possible to calculate the beneficial effect in the reduction of risk per unit of return achieved in the portfolio.
Diversification benefits can be harvested at the level of both asset allocation, using mean variance optimisation, as well as when combining factors to maximise returns and minimize portfolio risk.
Risk and reward go hand in hand
Achieving higher levels of return requires an investor to assume a higher level of risk. Markets are functional and efficient enough to mean there is rarely such a thing as a free lunch. Across the universe of available investments, the available outcomes can be measured as return per unit of risk.
Among the first models researchers used to rigorously test ideas about market risk and returns is the Capital Asset Pricing Model (CAPM), developed by the Nobel Prize winning academic Professor William Sharpe. This describes mathematically the relationship between market risk and the level of expected returns of the given assets.
This model, helping explain what was named the ‘market factor’, was followed with definitive studies by Nobel Laureates Eugene Fama and Kenneth French introducing the ‘value’ and ‘size’ factors which together with the market factor help explain the majority of variation of portfolio returns. Other factors have since emerged to help better explain risk and rewards in markets.
Factor based investing, where assets are decomposed into bundles of underlying risk factors, emerged from this research to help investors achieve their desired returns at lowest risk and lowest cost.
Obtain economies of scale
The vast majority of financial advisers in the UK cannot influence product or service providers; they simply do not produce enough business to have a voice. ebi can and does, acting as an agent on behalf of its users and their clients to obtain lower trading costs, launch new funds, and access otherwise unavailable share classes with lower charging structures e.g. Vanguard Institutional Plus.
In a capitalist society, capital and labour are generally put to efficient use, seeking to generate the maximum wealth for those who take on the risk of enterprise. It is assumed that free markets price financial assets effectively and fairly, based on supply and demand, where profits are ultimately expected to flow through to owners.
An understandable and simple approach
The goal of keeping ebi’s investment process relatively simple is not for simplicity’s sake, but because that is what the empirical evidence suggests we should be doing.
Our Investment Committee
Craig Burgess is Chief Executive Officer of ebi Portfolios. Craig has 28 years’ experience in the wealth management industry as a financial adviser and serial entrepreneur. An early adopter of evidence based investing, Craig founded ebi Portfolios as the first ‘Turnkey Asset Management Program’ (TAMP) in the United Kingdom, to supply advisers with an outsource facility for investment management. In 2014, Craig launched Vantage, a Discretionary Fund Management (DFM) service to supply low-cost balanced fund management. Previously, Craig founded and sold Blackstone Wealth Management, a successful financial adviser practice. Craig holds the Investment Management Certificate, is a Certified Financial Planner, Chartered Financial Planner and is a Fellow of the Personal Finance Society.
Joshua Clarke, CFA
Josh is the Portfolio Manager at ebi Portfolios. Joining in 2018, Josh is responsible for the day-to-day operations of the investment team, ebi’s evolving performance and analytical resources, trading and rebalancing, as well as helping develop ebi’s portfolios and strategy. Josh is a CFA Charterholder and a BSc Economics and Finance graduate with first-class honours. He holds the CFA Investment Management Diploma (ESG), CFA UK Investment Management Certificate, CFA Certificate in ESG investing and is currently pursuing the CFA UK Certificate in Climate and Investing.
Jonathan Griffiths, CFA
Investment Product Manager
Jon is an Investment Product Manager at ebi Portfolios. Joining ebi in 2023, he brings with him 10 years’ experience in the investment industry, including roles as an Investment Specialist within a fund manager and as an Investment Analyst within an investment consultancy.
Jon is responsible for investment research and analysis, communicating information on ebi’s portfolio suite, and providing investment solutions to clients. Jon is a CFA Charterholder, and graduated from the University of Nottingham with a BSc (Hons) Mathematics and Economics (First Class) degree. He holds the CFA UK Investment Management Certificate (IMC) and the CFA Institute Certificate in ESG Investing.
Chris, a Data Analyst at ebi Portfolios, joined the team in 2023. He holds an MSc in Brain Imaging and Cognitive Neuroscience from the University of Birmingham, as well as a BSc (Hons) in Biological Psychology from the University of the West of England. Chris has a specialisation in data analysis, quantitative research, and statistics, utilising Python alongside other programming techniques. At ebi, his primary duties include collecting, curating, and managing data in both internal and third-party systems. He also builds and maintains automated workflows within the organisation, and provides support to the broader business in their data analysis needs.
Sam is an Investment Analyst at ebi portfolios, joining in 2022, after graduating from the University of Liverpool with a BA (Hons) Degree in Business Economics. He is responsible for portfolio construction and management, performance reporting, fund research and analysis using Morningstar and Style Analytics. He also manages the monthly and quarterly economic market commentary and produces equity and fixed income research and analysis to present on our fund choices page. Sam is currently studying for the (CISI) Investment Advice Diploma and holds the Bloomberg Market Concepts (BMC) Certificate.
Helping our advisers succeed
“We now have a robust investment proposition that has helped to de-risk the business and totally simplify what we do. The back-up and technical support is outstanding. It also helps when you passionately believe in something too.”