About Cheviot Value Management What is the advantage of investing with an investment advisor over a mutual fund? What is the advantage of investing with an investment advisor over an index fund? How are the accounts managed? Is it possible to speak with the individuals actually managing my money? I need more than simple investment management. Do you provide financial and retirement planning advice? Can I withdraw my money at any time? How long have you been in business? How much do you have under management? Do you manage your clients’ portfolios in a tax-efficient manner? Do you purchase anything besides common stocks (e.g., bonds, options, futures, currencies, commodities, etc.)? How many companies do your clients’ portfolios have on average? Do you have a long-term or a short-term focus? What is the advantage of investing with an investment advisor over a mutual fund? A mutual fund will never be able to offer individual service to its clients; this is a simple fact of the way they are constructed. In addition, mutual funds are not able to tailor their investment strategies to each and every individual client’s needs, as an investment advisor is. Most importantly, investment advisors can protect their clients from mistakes that individuals often make due to short-term emotional reaction market fluctuation. Several studies have shown how emotions have a negative impact on the returns to the average mutual fund investor. For example, one study discovered that over a six-year period, the average rate of return to investors in 199 growth-oriented mutual funds was ten percent per year lower than the returns achieved by the funds. This huge difference in returns was attributed to investors trying to time the market, by purchasing when the market had been rising for some time and selling when the market had been falling. In other words, many mutual fund investors buy high and sell low, the opposite of what they should do to maximize investment returns. What is the advantage of investing with an investment advisor over an index fund? While an investment advisor is able to make decisions based on the undervaluation and overvaluation of companies’ shares, an investment in an index fund forces the investor to ride the ups and downs of the market. Furthermore, as with other mutual funds, many investors in index funs buy high and sell low. Influenced by the emotionality of the market, they put money into index funds when the market is making new highs (and therefore is no bargain), and pull money out of index funds when the market is making new lows (a good time to buy). How are the accounts managed? The accounts are managed individually, not as part of a group. This allows us to focus on each client’s individual needs and circumstances. Is it possible to speak with the individuals actually managing my money? Yes. Every phone call, letter, and personal visit is directed immediately to one of the firm’s principals, those who are directly in charge of handling and managing our clients’ funds. I need more than simple investment management. Do you provide financial and retirement planning advice? At the inception of our services to each client we learn about the client's personal financial objectives, including plans to save and invest for retirement. Those objectives are the basis for a client-specific investment policy that is formalized in a written investment policy memorandum to the client. Can I withdraw my money at any time? Yes. Our clients’ accounts are in their own names and they are free to contribute or withdraw capital at any time. We do, however, ask that our clients inform us of their intentions before any significant contributions or withdrawals are made. How long have you been in business? Cheviot Value Management was founded in 1985. How much do you have under management? Cheviot Value Management currently manages approximately $236 million. Do you manage your clients’ portfolios in a tax-efficient manner? Yes. Our long-term style of investing effectively reduces capital gains taxes paid by our clients. Furthermore, tax-minimizing strategies are employed whenever possible. Do you purchase anything besides common stocks (e.g., bonds, options, futures, currencies, commodities, etc.)? Generally, we limit investments to marketable securities, namely stocks, bonds, and money market instruments. Occasionally, we invest in special purpose mutual funds or in diversified equity mutual funds. We adjust the balance of each in accordance with our clients’ specific needs. We do not invest in derivatives (e.g., options and futures) of any kind. How many companies do your clients’ portfolios have on average? While the size of one’s account dictates exact asset allocations, a client’s account will usually have between 15 and 35 companies depending on market conditions. Do you have a long-term or a short-term focus? We have a long-term focus. It is our belief and experience that steady, methodical compounding of one’s capital is the key to successful investing.