What are Litman Gregory’s expectations for fund risk levels? How does Litman Gregory define risk?
Our focus is on long-term return. Consequently we think of risk in terms of not achieving long-term return objectives. However, practically speaking we believe investors tend to think of risk in terms of absolute loss. So our general objective is to keep the risk of one-year loss roughly in line with each fund’s benchmark. The mix of managers and the number of managers is partly a function of this objective. There is no guarantee that this objective will be met.