The Value Add of Smart Beta

ETF Model SolutionTMs incorporates fundamental indexing (smart beta) strategies in our models where appropriate, including our Endowment Collective Fund, as we see potential to add value and enhance our risk-adjusted returns.  The two founders of AQR Capital Management recently wrote piece about smart beta in which they categorize each of the types of approaches and describe how they each may be incorporated into a broad portfolio. The article provides an overview covering the concepts...

Endowment Index^TM Asset Allocation and 10 Year Returns Compared to the Nation’s Largest Pension Fund

The nation’s largest pension fund, the California Public Employees Retirement System, better known as CalPERS has been in the news this week with an announcement that they are going to be liquidating their $4B hedge fund allocation over the next year.  Apparently, the high costs and complexities, combined with their ability to scale the asset class relative to their $300B portfolio just isn’t worth the effort. While on the surface this...

DC Plans Can Benefit by Adopting DB Plan Best Practices

A presentation by Robert C. Merton at Plan Sponsor Council of America’s 2014 National Conference highlighted several best practices used by defined benefit plans that could be adopted by defined contribution plans to help improve plan outcomes.  The two areas of focus were on communication with participants and on investment selection.    For example, since DB plans promise a benefit, their managers seek to invest to achieve that goal....

Investment News Webcast “Demystifies” Liquid Alts for Advisors

In a webcast presented by Investment News, Consuelo Mack interviewed Robert Jenkins, Managing Director/Global Head of Research for Lipper, Dr. Hossein Kazemi, Ph.D., CFA Senior Adviser to the CAIA Association’s Program, and Dennis Bowden Managing Director U.S. Research & Advisory at Strategic Insight.  The interview discussion centers around understanding and differentiating different types of alternative strategies and how they can best address a client’s needs. The webcast content also includes information on how to construct a well-diversified portfolio using liquid alternatives...

Small Business Success Traits

Rob Riedl, Chief Financial Officer of ETF Model SolutionsTM is featured in an interview conducted by Direct Capital’s Small Business Success experts group, which highlights traits of successful small business owners.  Rob’s comment: They remained focused on the opportunity to be successful and are not distracted by the possibility of failure. They are always all in and never give up! The entire list, which includes observations and comments from 49...

A Better Option Than Target Date Funds

An article titled “A Better Option Than Target-Date Funds” written by Prateek Mehrotra, CIO of ETF Model SoTMlutions and Endowment Wealth ManagementTM was recently published in the Industry Voices column on PlanSponsor.com. In the article, Prateek discusses the following drawbacks of TDFs: TDFs assume a “one-size fits all” and fail to take into account unique risk profiles and investment objectives of participants TDFs mechanical shift to conservative assets in...

Paper Explores How Liquid Alternatives Can More Effectively Diversify A Fixed Income Allocation

A “Blue Paper” titled It’s all About your Core from Pioneer Investment’s Thomas Swaney discusses how traditional diversified fixed income strategies may offer investors lower benefits than they think and that there may potentially be “equity-like risk” in non-treasury fixed income asset classes. Specifically, Swaney cites research showing that various asset classes within the fixed income space may have higher correlations to equity markets and investors must truly understand these risks within their portfolios.  In times of...

ETF Model Solutions^TM In the News:’ Prateek Mehrotra, CIO Comments on Current Equity Prices in Institutional Investor

Comments from Prateek Mehrotra, CIO of ETF Model SolutionsTM, were printed in InstitutionalInvestor.com earlier today in an article titled Portfolio Perspective: Warning Signs for Your Client’s Stock Market Exposure.  In the article, Prateek discusses a number of valuation metrics that he follows, many of which are extended.  This leaves the market potentially vulnerable to a “mean-reversion” type correction, although there is room for further upside in equity prices.  He further comments that “Portfolios can...

Gloomy 7 year outlook predicted for bonds

Jonathan Mackay of Morgan Stanley Wealth Management sees annual returns in the 1-2% range for investment grade bonds for the next 7 years, which correlates into a negative real return forecast when taking into account inflation. He goes on to suggest/recommend that investors hold a smaller allocation to bonds than in previous cycles.   Also yesterday, Bank of America’s Michael Hartnett reported that 45% of all government bonds worldwide now...

Five Reasons Endowments Must Stick With their Long Term Investment Strategy Despite Recent Underperformance

The below excerpt was taken from an article written by Prateek Mehrotra, MBA, CFA®, CAIA® which was posted on GuruFocus.com website on Friday 8/2/2014. The portfolio managers atop the country’s most respected university endowments failed to make the honor roll during the current bull market despite their top salaries and genius IQs. Harvard University’s $32.7 billion endowment returned an average of 10.5% annually over the past three years through...