Registered Investment Advisor

Investment Strategy Overview

The firm’s investment strategy was created while Ryan engaged in a graduate research project while studying finance at the UCLA Anderson School of Management. The result was a whitepaper study that served as the firm’s bedrock.

We spend the better part of our time researching and focusing on how macroeconomic events and investor behavior impact long-term returns. In short, emotional investing, frequent reactive trading, and expensive account fees are detrimental to portfolio returns. We have designed an investment strategy of best practices to help our clients avoid these pitfalls. Our investment strategy focuses on 3 CENTRAL PRINCIPALS:

  • Low-cost/Passive Management
  • Risk Management
  • Behavioral Economics
Bull Oak Capital Investing

3 Central Principals

Passive Management

We invest exclusively in index ETFs. Empirical evidence shows us that the vast majority of active managers (those trying to beat the market) underperform the market. Over the past 5 years ending December 2017, only 15.8% of active managers have beat the S&P 500 (Standard & Poor’s).

84% of active managers underperform
Note: Research shows that trying to beat the benchmark has a low probability of success. So why try? At Bull Oak, we avoid this pitfall and invest exclusively in index funds.

Over the longer-term, 15 years, the figures get worse with 95% of funds underperforming. If these were Vegas odds, nobody would be playing this game. However, investors continue to play because they are simply unaware of the odds stacked against them.

We place the odds in our clients favor by simply refusing to play. As technology continues to advance and as information diffusion continues to accelerate, we believe that the sub-asset classes will continue to become more efficient, making active management more difficult. We save our clients the cost and headaches of active management and instead purchase inexpensive passive index funds for our clients. We select and continuously monitor the most appropriate representative fund for each of the major stock, bond, and alternative markets.

Risk Management

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.

Behavioral Economics

We strive to instill positive behavioral heuristics within our clients. The goal is to stay invested during the long-term, whether the market is bullish or bearish. This is achieved by 1. implementing our Risk Contribution Method, 2. training our clients to keep a long-term view, and by 3. keeping an open line of communication with our clients. We aim to be as transparent and communicative as possible with our clients, which we believe produces success.

The Five Bull Oak Investment Strategies

The firm’s investment strategy was created by Ryan Hughes, top academic finance professors, and top industry professionals. It was created while Ryan engaged in a graduate research project while studying quantitative finance at the UCLA Anderson School of Management. The goal was to build an investment strategy that combined empirically-proven strategies used by some of the most successful investors.

Bull Oak Aggressive

Aggressive

Strives to aggressively take advantage of global capital market investment opportunities while exhibiting less volatility and maximum drawdown than conventional equity portfolios over full market cycles. This strategy may be appropriate for investors who have a 10 to 15 year time horizon, a substantial tolerance for risk and an ability to withstand a permanent loss of capital.

Bull Oak Moderately Aggressive

Moderately Aggressive

Seeks to achieve equity-like returns over full market cycles but with less risk. This strategy may be appropriate for investors who have a 7 to 13 year time horizon, a high tolerance for risk and an ability to withstand a permanent loss of capital.

Bull Oak Moderate

Moderate

Seeks to achieve equity-like returns while exhibiting less volatility and maximum drawdown over full market cycles. This strategy may be appropriate for investors with a time horizon greater than five years and who have a moderate tolerance for risk.

Bull Oak Moderately Conservative

Moderately Conservative

Attempts to earn stable returns with low levels of volatility over time while accepting a small degree of risk and volatility to seek some degree of appreciation. It is designed to benefit during periods where the economy is thriving while protecting during periods of uncertainty and high levels of market volatility.

Bull Oak Conservative

Conservative

Attempts to earn stable returns with low levels of volatility over time while maintaining a focus on downside risk management. It is designed to benefit during periods where the economy is thriving. However, it also attempts to protect during periods of uncertainty and high levels of market volatility.

Our Fee Schedule

Our account minimum is $750,000. We calculate our fees using a linear schedule and not a tiered/progressive fee schedule. There are no additional cost for the financial planning process or ongoing advice. Our fee schedule is based off of the clients AUM (Assets Under Management) and we bill our clients monthly.

For all of our clients, fees are automatically deducted from their investment account. A statement is regularly sent to our clients on a monthly basis, including fees, holdings, performance, etc.

We strive to be completely transparent with our clients and that includes how much they pay us. We believe that this is a differentiator for us in an industry that is often opaque and misleading. As a fiduciary Registered Investment Advisor (RIA), the only revenue we receive is directly from our clients. We do not receive compensation via commissions, product fees, etc. This means that your incentives are aligned with our incentives. The better you do, the better we do. All with transparency.

Assets We Manage
Annual Fee
$750K – $1MM0.99%
$1MM – $3MM0.89%
$3MM – $5MM0.79%
$5MM – $10MM0.69%
$10MM – $20MM0.59%
$20M and above0.49%
Bull Oak Tax Efficiency

Tax Efficiency

Because we invest exclusively in passive ETFs, we have a major advantage over mutual funds and other actively managed accounts. There is far less turnover in ETFs, which in turn avoids capital gains. We can also implement a more tax-advantaged process by determining which shares are to be sold when selling a position (e.g. we can choose to sell only positions that have a higher basis).

Aside from the inherent tax-efficient nature of ETFs, we also help our clients lower their tax liability by choosing the most efficient place to allocate their assets. Some assets have a higher tax liability, such as high yield bonds, vs. those that do not, including tax-exempt bonds. Therefore, we place a preference as to where those assets should be held (Taxable Account vs. Traditional IRA/Pre-Tax vs Roth IRA/Post-Tax) driving significant tax savings.

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 firm where you will have 24/7 access to your account. Learn more about TD Ameritrade’s client portal here.

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