Discussion about ETFs that we invest in on behalf of our clients.

May 2017

We’ve officially launched a me-too “Robo”

By |2019-03-11T19:24:58+00:00May 25th, 2017|

We’ve been excited about the movement toward automated, fiduciary investment advice, sometimes called robo-advice, since we saw what had to offer more than five years ago. I remember looking over Joyce’s shoulder as I walked her through their site, with her jaw dropping to desktop. Now, the likes of Vanguard and Charles Schwab are taking the lead from those first-to-market robos, including Betterment and Wealthfront.

In February of last year, we launched our own robo-advisory service we call Sustainable Income Portfolios. We aimed for a niche market that the others haven’t targeted: baby boomers looking to turn their 401ks and IRAs into retirement income. We purposefully kept our fees on the low-end (a vendor said yesterday, “those are some slim margins!”), far under-pricing Personal Capital, which charges 0.75% per year, with our flat fee of 0.36% per year. While WealthFront, Schwab and Betterment all come in around the 0.25% per year fee schedule, we think we’re worth the extra 0.11%.

Why? Because we’re not robots. We are real people, with over 20 years of investing and client service experience who have survived two huge bear markets both in 2000-2002, and 2008-2009. We know how our clients react to market swings. We understand how volatility affects the psyche. We also understand the value of ETFs designed with rock-bottom fees and broad market exposure.

We feel we’ve blended the best of both human advice, and automated investment allocation.

As of February 2017, we added growth portfolios to our automated investment management service, so folks have over a dozen portfolios to choose from, based on their return objectives and tolerance for volatility.

Sustainable Income Portfolios have had a terrific first year. Now, they exist alongside portfolios targeting growth, socially-conscious investing, and closed-end fund arbitrage. You can invest in any of our models, from Risk Number 25 all the way to Risk Number 82 – at

July 2016

Outperforming Math Wizards? No problem!

By |2016-07-05T17:34:08+00:00July 5th, 2016|

A few weeks back, I attended a due diligence forum in Denver, Colorado with 361 Capital, an alternative asset manager fairly new to the mutual fund space. They currently manage five funds across three strategies: long/short, counter-trend managed futures, and “macro opportunity”. In looking over the offerings, the macro opportunity fund has been a dismal failure since launching two years ago, and was not even mentioned at the forum. That’s okay – I wasn’t planning any diligence on it given its performance history.

The global long/short equity strategy is their clear leader, and the strategy they focused half of the presentations around. The fund began trading 30 months ago, has a clearly defined process, executed by a brilliant investment team. Funny thing is, it’s sub-advised by Analytic Investors, and 361 Capital has no control of portfolio selection or trading. Though 361 Capital has their own investment team and traders, they’re simply the marketing arm for Analytic Investors’ historically successful strategy with this particular fund.

I happen to be “one of those guys” that asks a lot of questions. At a “due diligence forum”, fortunately it is welcomed and encouraged. As I listened to the smart folks from Analytic Investors walk us through their investment process, I came up with my own idea of how to “test” if Analytic Investors and 361 Capital really add value to the investment research that exists (though they create and publish much of it). I asked a pointed question at the forum trying make them squirm, but it was answered politically, rather than directly. You know how that is given the constant election cycle media circus that dances in front of us.

I give them the benefit of the doubt for sidestepping my question, as it would have been nearly impossible to respond on the fly to my challenge. When I got back to the office and discussed with Joyce my experience at the forum, I walked her through my challenge, only to discover that I was right. Looking back at the fund’s results since inception, we could basically replicate how they invest using only two ETFs. So the question was now if I could replicate the results of their investment process at a lesser cost than they charge inside the mutual fund.

Investment theory is easy to research, and test. On the flip side, practical investments take real money, and need real markets (supply and demand). Capital is not free. So when we “sell short” investments, we must pay margin interest to “borrow” the shares that we sell. Using the tools we have at the office to back test investment strategies, I can – in a vacuum – replicate their investment results. In fact, my results even outperformed the mutual fund by nearly 1% in every 12 month period. However, given the ease of trading in and out of a mutual fund, and the ability to avoid margin interest costs, I plan to continue utilizing the 361 Global Long/Short Equity Fund – because we can’t invest in a vacuum, and we will incur cost drag in our replication strategy.

While I’m convinced their investment process is solid (if not brilliant given the academic research that supports it), after seeing what’s behind the curtain, it took me all of five minutes to replicate it using inexpensive ETFs. We live in a great time to be investing. ETFs have revolutionized the investment landscape, and made it possible for investors like us to keep up with highly paid math wizards at a ridiculously low cost.

June 2016

“Out of the Box” Investment Strategies

By |2019-03-11T19:24:58+00:00June 3rd, 2016|

Not only are we the only independent, fee-only registered investment advisor in Columbia County (i.e. required to act in our clients’ best interest AT ALL TIMES), but we implement some unique investment strategies that our clients appreciate.

We don’t simply place your money into loaded mutual funds and tell you to ride out the market swings.

Aside from a typical, well-balanced portfolio utilizing ETFs, mutual funds, stocks and bonds, here are some of our more unique strategies that we currently offer:

  1. Closed-End Fund Arbitrage. We go long/short using high payout, heavily discounted closed-end fund shares and offset the holdings exposure via index ETFs.
  1. Private Real Estate Notes. We work with three separate builders/real estate developers that build spec homes, purchase for their rental portfolio, or fix and flip. They pay an average of 10-12% interest for first position with LTVs from 50% – 100%.
  1. The Naked Alpha Fund. This is a hedge fund, managed by Adam Sommers, that employs an option strategy that uses vertical put spreads, real estate, costless collars, and layers that over our Closed-End Fund arbitrage strategy and aims for 10-20% per year.
  1. Sustainable Income Portfolios. We have five SIPs that are built for ultraconservative to aggressive investors. One is a bond ladder using ETFs, One is long-only, IRA-eligible Closed-End Fund Arbitrage strategy, and the other three are ETF portfolios made up of three buckets of income-producing assets: Stocks/Bonds/Alternatives. SIPs are less active than the first three items, thus we only charge 3bps per month. We do re-balance them strategically and tactically quarterly. These portfolios provide good returns over the business cycle, but are subject to market movements. The focus of these portfolios is the regular income they produce. it allows for clients to use the consistent income, and let the portfolio ride market cycles.

We’d love to discuss any and every one of these options with you as you look to invest your hard-earned wealth responsibly, and with integrity.

May 2016

Generating Sustainable Income

By |2019-03-11T19:24:58+00:00May 2nd, 2016|

We’ve been working for the past year or so on developing a simple, cost-effective way to generate income for clients in retirement. In years past, you could simply ladder investment grade corporate or U.S. Treasury bonds, and earn a nice 5-7% yield on your portfolio with very little risk.

However, since 2008, the Federal Reserve, in its attempt to keep the economy growing, has set it’s overnight lending rate to banks at zero percent. This key interest rate has influenced interest rates the world over. And while you can now borrow to purchase at house at sub-4%, the losers in a low-interest rate environment are retirees attempting to live off the income generated by their savings.

Enter Sustainable Income Portfolios, or what we call SIPs. We have developed 8 optimized SIPs ranging from ultra-conservative to aggressive, that aim to provide investors inflation-adjusted income, indefinitely. The more aggressive you go on the scale, the more principal fluctuation you are likely to endure. However, as in any investment, the lower the risk, the lower the potential reward.

Currently (as of 5/2/2016), all of our SIPs generate income between 2.9% and 6.5% in annual distributed income. There is potential for price appreciation in all but the most conservative SIP.

The ultra-conservative SIP that provides the 2.9% yield is best suited to those investors looking to protect principal, but yearning for more yield than a bank will provide. The other seven SIPs should all be able to keep up with inflation as asset prices rise, in addition to the monthly income they provide. The most aggressive SIP has the potential for a total annual return of up to 11%, based on past returns and volatility.

You can learn more at

April 2016

Our 4 favorite ETFs at the moment

By |2016-05-09T21:23:15+00:00April 29th, 2016|

The following 4 ETFs are favorites of ours at the moment, and are included in at least 5 of our Model Portfolios:

  • (8) VYM – Vanguard High Dividend ETF. Yield: 3.10%. Expense ratio: .09%
  • (8) VNQ – Vanguard U.S. Real Estate ETF. Yield: 4.28%. Expense ratio: .12%
  • (7) IVV – iShares S&P 500 Index ETF. Yield: 2.28%. Expense ratio: .07%
  • (5) IGHG – ProShares Interest-Rate Hedged Corp. Bond ETF. Yield: 3.64%. Expense ratio: .30%