Managing through the uncertainty of current economic and market conditions requires a cool head and a rational decision- making process. We are among the very few investment managers, if not the only one, that has built its process around the tenets of behavioral finance. It’s a school of thought most closely identified with Daniel Kahneman, who won a Nobel Prize in economics in 2002 for his contributions to decision theory, specifically how it affects investment decisions.

The goal of behavioral finance is to embrace a slower, effortful, and dispassionate decision-making process in order to eliminate the cognitive biases that occur when investors react quickly and emotionally to market changes.

Behavioral finance is hardwired into our investment process, which is separated into four groups that independently conduct macroeconomic research, security selection, portfolio construction and portfolio management. This team-based approach effectively slows the investment process, enables the specialized groups to focus on their areas of expertise, and results in more deliberate decision-making.

As opposed to a star-based system where decisions are made by one person or small group of people, we believe disaggregating the process ultimately leads to better investment outcomes by mitigating behavioral biases, snap judgments, and other decisionmaking pitfalls. It also provides a foundation for a disciplined, systematic, and repeatable investment process.

Behavioral finance says that both institutional and individual investors value avoiding loss more than they value gains. Ultimately, our clients value preservation of capital more than anything, so that filters through everything we do.

While remaining consistent with the fundamentals of behavioral finance, we are buy-to-own investors—not buy-and-hold investors. We do not trade as often as other asset managers, and we have a lower turnover in our portfolios. The people and process are the same for all the portfolios we manage, including mutual funds, ETFs and institutional accounts.

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GUGGENHEIM INVESTMENTS is the global asset management and investment advisory division of

Guggenheim Partners, with $202 billion1 in total assets across fixed income, equity, and alternative

strategies. We focus on the return and risk needs of insurance companies, corporate and public

pension funds, sovereign wealth funds, endowments and foundations, consultants, wealth

managers, and high-net-worth investors. Our 275+ investment professionals perform rigorous

research to understand market trends and identify undervalued opportunities in areas that are often

complex and underfollowed. This approach to investment management has enabled us to deliver

innovative strategies providing diversification opportunities and attractive long-term results.

 

1 Guggenheim Investments total asset figure is as of 06.30.2016. The assets include leverage of $11.4bn for assets under

management and $0.5bn for assets for which we provide administrative services. Guggenheim Investments represents

the following affiliated investment management businesses: Guggenheim Partners Investment Management, LLC,

Security Investors, LLC, Guggenheim Funds Investment Advisors, LLC, Guggenheim Funds Distributors, LLC, Guggenheim

Real Estate, LLC, Transparent Value Advisors, LLC, GS GAMMA Advisors, LLC, Guggenheim Partners Europe Limited and

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