Investment Management

If you are in the saving and investing phase of your life, then it is imperative to pro-actively manage costs, taxes, and risks that could hinder or derail your financial plan. These are three areas where my analytical background and experience can be critical. Please use the tabs below to learn more about my approach to investment management.


fundsThe manager-of-managers approach refers to the use of existing products (e.g., mutual funds, ETFs, etc.) or third-party portfolio managers. This is the standard approach used by most advisors whereby your money is allocated to funds and external managers who buy and sell individual securities.

My expertise is critical for selecting and overseeing third-party managers, mutual funds, and index products. It allows us to dig deeper with my due diligence process to identify risks and opportunities other advisors do not see. Indeed, many advisors select funds based on their low fees or historical track records. Relying on these criteria alone is very dangerous as I explain below.

While many advisors are attracted to the low fees, it is imperative to conduct rigorous due diligence on index products. Each index product follows rules dictating how it selects securities and rebalances its portfolio. I dig deep into the metrics and models each index uses as well as the rebalancing mechanisms. My research has identified several significant issues with many popular index products. Indeed, many products suffer from subtle performance-dampening issues imposing costs that far outweigh the advertised fees.

While I do my best to mitigate the above issues with existing index products, investors looking for a higher degree of customization and performance should consider my Personalized Index Portfolios.

Selecting funds or managers based solely on historical performance exposes investors to potential bubbles (e.g., tech or housing stocks prior to the collapse of the dot-com and credit bubbles). Moreover, performance data often embeds survivorship bias and thus artificially inflates historical returns for various funds and strategies. It is critical to assess strategies and performance in an objective manner by evaluating each investment according to its mandated strategy, ability to follow that strategy, and deliver performance in excess of relevant benchmarks.

Lower-cost index strategies are constantly improving and raising the bar for active mutual funds and portfolio managers. I analyze performance and identify active managers who have kept up and outperformed their relevant benchmarks net of fees. My process weeds out many of the underperforming managers including closet-indexers (i.e., those active managers who charge higher fees but deviate minimally from their benchmark index). I also monitor the impact of turnover as taxes impose real costs and dampen the returns investors ultimately experience.

Tax Efficiency

Our Personalized Index Portfolios offer an unparalleled degree of customization and performance relative to off-the-shelf products and third-party managers. I first guide you through the process of developing a set of index rules tailored to your goals, risk profile, and personal preferences. I then manage a portfolio directly according to this customized index.

Personalized Index Portfolios effectively merge the investment advisory and investment management functions by translating your investment goals directly into portfolios of individual securities. By avoiding funds and third party managers, this naturally removes a layer of fees. More importantly, it allows for a higher degree of customization and several performance improvements.

In addition to avoiding the drawbacks associated with common index strategies I highlighted in my Investment Philosophy, I integrate more intelligent metrics and models for security selection and portfolio construction. Please read about some of the factors I can target and how they can improve performance:

Broad-based index portfolios invest in everything - the good, the bad, and ugly. Diversification is their primary risk management tool. My approach to risk management is different; I attempt to screen out the bad and the ugly. I quantify the quality of both operating businesses and management teams. I only invest in firms with high caliber, growing businesses and management teams who have demonstrated their ability to create and retain shareholder value.

Even the best companies in the world can be bad investments if you pay too much. I have developed sophisticated valuation models so that I can purchase and own companies at reasonable or dear valuations.

Investors seeking robust and growing income will appreciate my income portfolios. I leverage a combination of my quality and value models to identify strong companies that strive to sustain and increase their dividends. Moreover, I use an intelligent rebalancing mechanism to opportunistically target higher and/or safer dividend streams.

By investing directly in individual securities, my approach creates more flexibility for matching gains with losses as well as tax harvesting (systematically selling holdings that have fallen to facilitate increased tax capacity). This increases liquidity and improves after-tax performance.

Note: While some of the above concepts are not new, my analytic expertise allows use to formulate more intelligent metrics and models for security selection and portfolio construction. Please read my Investment Philosophy where I provide examples of how my modeling can improve performance.

Risk Management

Investors with specific platform requirements or a preference for more checks and balances may find my Institutional Index Portfolios more attractive. This approach decomposes my Personalized Index Portfolio process into three separate components: development, calculation, and execution.

My Institutional Index Portfolio model can help minimize potential conflicts of interest and allow for greater economies of scale for each component. I typically work with you in the development stage to translate your investment goals into a set of sensible index rules. I then facilitate the next two stages of the process by helping you choose and manage appropriate third parties for calculation and execution.

I develop a set of index rules based on your goals, risk profile, and other requirements. These rules typically target attributes such as quality, value, and income, but I can also integrate specifications for turnover and tax harvesting. My deep expertise in quantitative equity investing allows you to use a toolbox of more intelligent metrics and models relative to off-the-shelf indices.

This is an iterative process. I start by defining the purpose and tools at my disposal. I then suggest a starting set of index rules and back-test the index rules (i.e., look at hypothetical historical performance). After discussing how the rules impacted the results and comparing them to relevant benchmarks, I then fine tune them as necessary until you are comfortable the index will achieve your goals.

Once the index rules are finalized, I can help you find an appropriate third-party index calculator. This agency will be responsible for sourcing the required financial data, calculating the various metrics used in your index, and then reporting on the portfolio composition and performance. Should you choose, your index can be published to various financial data providers (e.g., Bloomberg, Thomson Reuters, etc) for the ultimate transparency.

I help you find an investment firm to execute the index as a live investment portfolio. They will build and manage your index-based portfolio. I work with you determine the firm(s) with the best balance of execution capabilities, costs, reporting, custodial platform, etc.