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Find your nearest eventEvidence-based investing is an investment strategy that relies on scientific research and historical market data to guide investment decisions. This approach is based on the idea that, over the long term, financial markets are efficient and that it's difficult to consistently beat the market through active stock picking or market timing.
Instead of trying to predict the future or chase hot stocks, evidence-based investors focus on building diversified portfolios based on sound investment principles that are backed by empirical evidence.
This typically involves investing in low-cost index funds or ETFs that track broad global market indexes, rather than trying to beat the market through active management.
Evidence-based investing is built on a small number of principles, each supported by long-term research:
Making decisions using empirical academic research
Building globally diversified portfolios
Keeping investment costs low
Avoiding unnecessary trading
Staying invested for the long term
By focusing on evidence-based investing, investors can benefit from the power of compounding over the long term while reducing the risks of market timing and emotional decision-making. This approach also helps investors avoid the high fees and hidden costs associated with traditional management and trading.
At its core, evidence-based investing is about making informed, data-driven decisions that are grounded in sound investment principles. By doing so, investors can build a solid foundation for their financial future and work towards their long-term goals.
Yes. Timeline's investment process is guided by a hundred years of empirical data, decades of academic research by renowned economists and the practices of leading institutional investors, as set out in our investment philosophy.
Our portfolios are globally diversified and built from low-cost funds. Rather than rebalancing on a fixed calendar, we use drift-based rebalancing, adjusting portfolios only when their allocation moves beyond a set tolerance.
Next steps:
If you are a Financial Adviser, contact Timeline to find out more about how we can help you.
See our evidence-based investment approach →
Explore our model portfolios →
If you are a consumer interested in this subject, watch video interviews about Evidence Based Investing at The Investing Show, sponsored by Timeline.
Traditional active investing often relies on fund managers attempting to outperform markets by selecting individual investments or predicting future market movements.
Evidence-based investing takes a different approach. Rather than trying to forecast what will happen next, it accepts that markets are difficult to predict consistently. Instead, portfolios are constructed using decades of academic research into how markets have behaved over time.
The emphasis shifts away from finding the next winning investment and towards creating diversified portfolios designed to capture long-term market returns in a disciplined, repeatable way.
Not quite. Evidence-based investing often uses low-cost passive investment vehicles because they provide efficient access to global markets, but the philosophy extends well beyond simply tracking an index.
Portfolio construction is based on research into diversification, investment factors, risk management and disciplined implementation. Passive investing is one tool within the broader evidence-based approach.
Not at all. Evidence-based investing isn't about settling for average outcomes. It aims to improve the probability of achieving long-term investment goals.
Rather than trying to outperform markets through prediction or frequent trading, evidence-based investors seek to capture the returns markets have historically rewarded, while avoiding unnecessary costs, emotional decision-making and uncompensated risks.
The goal is to build robust portfolios designed to help clients pursue their long-term financial objectives through a disciplined, repeatable process.
