INVESTMENT STRATEGY OVERVIEW
Our well-researched investment philosophy got its start at the UCLA Anderson School of Management. After years of refinement, we offer five investment strategies to our clients, ranging from Conservative to Aggressive.
Conservative
Moderately Conservative
Moderate
Moderately Aggressive
Aggressive
Conservative
Moderately Conservative
Moderate
Moderately Aggressive
Aggressive
Our Guiding Principles
1 Risk Contribution
2 Econ Environment
3 Exchange Traded Products (ETPs)
1Risk Contribution
To help keep clients from making the grave mistake of selling during periods of high volatility, we created the Risk Contribution Method. This methodology helps remove the natural human instinct of buying high and selling low (where we should be buying low and holding on for the long-term). It will instead underweight asset classes of high risk and overweight those of low risk.
While the sub-asset class levels (e.g. U.S. large-cap stocks) are largely efficient, the major asset classes are not. It is common for stocks to be at risk when an economic slowdown is imminent, whether that be a growth rate slowdown or an economic expansion. Sometimes, but not always, this coincides with periods of investor euphoria. In short, when stocks have had a good run and they are at their riskiest, we simply take some money “off the table.”
It is also common for stocks to be underpriced during periods of investor panic and economic contraction. After a stock market crash, we are able to take advantage of cheaper equity prices and buy at discount prices.
The Risk Contribution Method identifies these periods by carefully evaluating reliable forward-looking indicators. We then underweight those risk assets and overweight others to take advantage of these misaligned prices.
2Economic Environment
Different asset classes will perform better or worse depending upon economic conditions. For example, more expensive/speculative growth stocks that rely on cheap access to capital will typically perform better during eras of lower inflation rate whereas cheaper/value stocks will typically perform better during eras of higher inflation rates.
We will ‘lean’ into different asset classes depending upon these conditions.
3Exchange Traded Products (ETPs)
We invest exclusively in ETPs (exchange-traded products), which include ETFs (exchange-traded funds). An ETP is a basket of securities, usually stocks or bonds, that trade on an exchange and typically track an underlying index. They are similar to mutual funds, though ETPs offer three major advantages:
- ETPs trade throughout the trading day where a mutual only trades once after the market is closed. This allows us to provide more liquidity to our clients
- ETPs are more tax-advantaged versus mutual funds. Due to structural differences, ETPs typically incur less capital gains to their shareholders. Additionally, capital gains tax on an ETP is incurred only upon the sale of the ETP by the investor, whereas mutual funds pass on capital gains taxes to investors through the life of the investment
- Most ETPs have extremely low expense costs versus other investment vehicles. While these fees are built into the structure of the fund themselves, they are costs nonetheless. As a fiduciary advisory firm, we do not receive commissions or kickbacks from fund companies. Therefore, our incentive is to keep unnecessary costs from burdening your investment portfolio. ETPs help us do this effectively
TECHNOLOGY
You will have 24/7 access to your accounts that includes balances, positions, asset allocation, performance, statements, tax forms, RMD amounts, and others. In addition, you will also be able to track your overall net worth in real-time, a critical piece when evaluating your long-term financial goals.
WHERE YOUR MONEY IS HELD
All of our client’s assets are held at TD Ameritrade via brokerage accounts (IRA, Roth IRA, Trust, Jt Ten, etc.). We do not directly custody our client’s assets. Your account(s) is held at a large, well-known advisory firm where you will have 24/7 access to your account.
OUR FEES
Our fee schedule is designed to be fair and transparent. As a fiduciary financial advisor, we do not receive commissions, kickbacks, or other forms of outside compensation. All of our services are included in this schedule as we do not have any other fees. In fact, there is no charge for the initial financial plan nor the continuous financial planning services you would receive as a client.