FAQs - Account Management

How do you invest differently than everybody else and why should I care?

We are challenging the current archaic financial system with a method called risk budgeting. If your portfolio has more protection in place during market downswings, it is much easier to build wealth over time. We seek to add this protection and minimize risk with Dynamic Hedging Techniques and risk budgeting. We want our success to be your success!

What does “hedging” mean?

Hedging means we take an action in the portfolio in an attempt to reduce a certain risk. Some techniques we utilize are short positions on the S&P 500, cash, and correlation hedges.

How are you different from “robo” advisors?

Many “robo-advisors” simply invest your money into passively managed ETFs and rebalance the positions at a set frequency, typically annually or semi-annually. This is how money has been managed since the 1950’s and is often called “modern portfolio theory.” We are challenging this archaic system with a method called risk budgeting. This is a rules-based, disciplined process that sets budgeting limits on the amount of risk each holding contributes to a portfolio. We measure this risk with volatility and correlation. If our holdings become highly correlated we hedge this risk with a short position, if volatility exceeds our threshold we hedge with cash. If your portfolio does not lose during market downswings, it is much easier to build wealth over time.

Is everything automated?

Yes, account opening and on-going management/maintenance is automated. Our proprietary algorithm is responsive on a daily basis to risk. It never sleeps, and is always watching your back.

How often do you rebalance my portfolio?

The algorithm is always working. It never takes a break. It calculates risk on a daily basis. This means we rebalance when risk thresholds exceed their budget limits. While this is typically a monthly rebalance, it could occur more or less frequently depending on market conditions.

What does Dynamic Risk Hedging mean?

We are challenging the archaic financial system with a method called risk budgeting. This is a rules-based, disciplined process that sets budgeting limits on the amount of risk each holding contributes to a portfolio. We measure this risk with volatility and correlation. If our holdings become highly correlated we hedge this risk with a short position, if volatility exceeds our threshold we hedge this risk with increasing cash. This means we are dynamically managing the portfolio based on market conditions with the goal of protecting assets in down markets.

Are my investments guaranteed to not lose money?

No, although we seek to mitigate risk in down markets, investments are not guaranteed and past performance is not indicative of future results.

Do all of your portfolios contain ETF’s?

Yes, we use low cost, tax efficient; commission free ETFs in all or our portfolios.

Why don’t you use mutual funds or individual stocks?

Our research and experience has shown that ETFs provide the same exposure to the markets we want and at a cheaper cost than mutual funds on average. ETFs are also more diversified than individual stocks so we can more easily reach our objective of quality risk-adjusted returns.

Is my portfolio diversified?

Yes, we diversify your portfolio across many different asset classes and try to use non-correlated positions whenever possible. If we can choose two assets that have the same expected return, but do not move in tandem with one another, then we can buy both and effectively reduce risk without hurting potential return. We also use Dynamic Risk Hedging techniques to further mitigate risk where simple diversification can fall short.

Do you engage in tax loss harvesting?

Yes, we sell shares with the largest losses first, largest gains last, regardless of long or short-term tax status. We do this so investors are able to offset taxes on both gains and income.