Investment Management

At LPL Financial, our investment approach is based on a belief in markets.

Rather than relying on futile forecasting or trying to outguess others, we draw information about expected returns from the market itself—letting the collective knowledge of its millions of buyers and sellers set security prices.

We believe there are two components that make up investment performance: Beta and Alpha

Beta is the risk of the overall stock market. Accepting market beta means we should be rewarded with market like returns. We feel we can capture those market returns through a passive investment approach, similar to index fund investing, to support our baseline investment performance.

Alpha is the excess return of an investment relative to a benchmark index. We utilize a multi-dimensional approach to capture long-term alpha by tilting the holdings towards securities characteristics that have theoretical research supporting higher expected return over time and then let markets do what they do best—drive information into prices.

This frees us to spend time where we believe we have an advantage, namely in how we interpret research, how we design and manage portfolios, and how we service our clients. It means we take a less subjective, more systematic approach to investing—an approach we can implement consistently and investors can understand and stick with, even in challenging market environments.