Author Archives: Kostya Etus, CFA

With rapid changes in the economy and markets, many investors expect that their portfolios should also adjust. After years of passive investment approaches leading the way, the markets recently shifted in favor of more active and more dynamic investment management strategies to take advantage of those changes. 

This month we bring you a strategist pairing and sample portfolio recipes that can help investors adapt as the world quickly changes. 

Brinker Capital – Destinations Portfolios

• Brinker Capital’s Destinations Portfolios provide the active management investors want, dynamically diversified, to help keep them invested.
• Brinker Capital’s Destinations are a suite of dynamic, multi-asset class, mutual fund portfolios with one focus—to improve investor outcomes.
• Actively managed and broadly diversified with a mix of growth, stable, and diversifying assets, Destinations offers a solution for every investor through six dynamic risk-based portfolios and three income-focused portfolios, with versions for tax-sensitive investors. 
• The Destinations Portfolios are constructed using the Destinations Funds – a series of multi-manager, sub-advised mutual funds ranked as a top ten of Barron’s Best Fund Families in two of the last three years. 
• Founded in 1987 and headquartered in Berwyn, PA, Brinker Capital is a boutique manager known to be an expert in asset allocation and money manager due diligence. 

Ocean Park – Ocean Park Balanced

• The Ocean Park Balanced Risk Model has two investment objectives: provide long-term total return and limit volatility and downside risk.
• The investment strategy is focused on multi-asset diversification with unusually broad diversification across asset classes, markets, industries, and issuers. A passive “buy and hold” strategy is not used. 
• As part of an integrated risk-management discipline, the investment team monitors underlying holdings daily, applying a trailing stop discipline to each holding, based on a proprietary approach, to limit the impact of any sustained decline in a given asset class or holding. The overall asset allocation is not fixed. 
• The portfolio can change significantly over time, re-allocating in response to trends and changes in the U.S. and global economy and various investment markets.
• Founded in 1988 in Santa Monica, California, Ocean Park has engineered their strategies to reduce volatility while achieving satisfying returns over a market cycle. As a result, they have built a reputation as a trusted partner to financial advisors and investors nationwide.

Desired Risk Benchmark

• Aggressive Growth – Destinations Aggressive Equity 90% and Ocean Park Balanced 10%
• Growth – Destinations Aggressive 80% and Ocean Park Balanced 20%
• Growth & Income – Destinations Moderate 70% and Ocean Park Balanced 30%
• Income & Growth – Destinations Moderately Conservative 50% and Ocean Park Balanced 50%

1725-OAS-5/25/2021

An inflation scare is in the air. Some speculate that just around the corner, inflation could rise between 3 – 4% and negatively impact returns. While we don’t know if and how high inflation will jump or how long it will linger, it raises an important issue facing investors. How do you hedge against the erosion power of inflation?

Investors look to their financial advisor for risk-appropriate returns, not only after costs and taxes but also after inflation. Diversification is a key component for helping to mitigate inflation risk. This month we bring you a portfolio pairing that helps to protect clients from inflation. 

Introducing “The Inflation Hedge Portfolio”

Brinker Capital “Real Assets Strategy”

• Brinker Capital’s Real Assets ETF strategy is composed of real asset exposures such as commodities, natural resources stocks, and real estate investment trusts. 
• Real assets tend to keep their value in inflationary environments, thereby helping preserve purchasing power.
• Founded in 1987 and headquartered in Berwyn, PA, Brinker Capital is a boutique manager known to be an expert in asset allocation and building strategies based on outcomes. 
• Their robust due diligence process and expertise in ETF management allow for creating a variety of unique model portfolios – such as the Real Assets strategy.
• The Real Assets strategy can be used as a diversifier to complement traditional stock and bond portfolios due to the less correlated nature of its alternative holdings.

Main Management “International Strategy”

• Higher inflation often means a weaker U.S. dollar and a stronger argument for non-dollar investment strategies such as Main Management’s International. 
• Main Management International seeks to achieve long-term capital appreciation by investing in non U.S. country and sector indexes. The portfolio utilizes a dynamic asset allocation approach that combines the benefits of both strategic and tactical allocation strategies. It employs a top-down assessment to identify undervalued economic regions, countries, and sectors. Rigorous fundamental analysis and a proprietary weighting methodology are key components of a disciplined allocation process. Concurrently, tactical allocations are used to anticipate and respond to opportunistic shifts in the market. Benchmark is the MSCI All Country World ex U.S. index. Inception: December 2007.
• Founded in 2002 and headquartered in San Francisco, CA, Main Management is an emerging manager specializing in actively managed ETF portfolios focused on undervalued asset classes. 
• Main Management’s investment philosophy is based on fundamental research used to find undervalued sectors and asset classes with potential for near-term price appreciation.
• Their methodology focuses on managing risk, controlling costs, and tax awareness. Their value tilt gives them a potential edge in periods of rising inflation and economic recoveries. 

Communities, Orion’s model marketplace features over 55 investment strategists with over 700 model strategies. Log in now to access a variety of Main Management and Brinker Capital models. Not yet a subscriber? Let us provide you with a demo of Orion Communities.

1402-OAT-4/26/2021

What’s on everyone’s minds right now? March Madness and taxes!  We can’t help you save a busted bracket, but we can help you create “The Tax Efficient Portfolio.” 

Communities, Orion’s robust model marketplace, makes it easy to pair strategists and develop portfolios to best align with your client’s goals and needs. This month, we pair two asset managers to help your high net worth clients achieve similar outcomes yet reduce tax consequences.

Introducing “The Tax Efficient Portfolio”

Russell Investments “Intelligent Diversification with Efficient Implementation”

•  Founded in 1936 and headquartered in Seattle, WA, Russell Investments is a brand manager specializing in global allocation, broadly diversified, multi-manager portfolios.
• Russell adopts a unique investment approach in which they utilize specific investment managers through a rigorous selection process to represent different asset classes within their asset allocation models. 
• Another unique feature is their tax-managed models use tax-exempt bonds, tax-managed equity, and real assets allocations – applying a more holistic approach to tax efficiency. 
• They offer standard and tax-managed allocation strategies across the risk spectrum using their proprietary Russell funds, which follow the methodology described above.
• These strategies are designed to represent an overall portfolio’s core holdings and are generally more passive and diversified in nature. However, their utilization of active managers and a tax-efficient approach creates additional performance potential.

PIMCO “The Premier Active Bond Manager”

•  PIMCO, often recognized as one of the world’s premier fixed income managers, was founded in 1971 and is headquartered in Newport Beach, CA.
• Their investment philosophy utilizes top-down forward-looking investment views to determine allocations, while a detailed bottom-up research process ensures enhanced security selection for individual bonds.
• This approach, combined with a robust risk analytics infrastructure, helps build reliability and investor confidence, integral for lower risk diversifiers such as PIMCO’s income strategies.
• PIMCO has a series of three fixed income strategies of varying risk exposures, utilizing their proprietary PIMCO mutual funds, that come in both taxable and tax-aware versions, which leverage more municipal bond funds.
• Given their focus on actively managed fixed income, these strategies pair well with more passive and broadly diversified options and those with higher risk, which may allocate more to equities.

Explore over fifteen Russell Investments’ models and 6 PIMCO models available in Communities. Not yet a subscriber? Let us provide you with a demo of Orion Communities.

1004-OAT-03/24/2021

Since the 1980s, the study of behavioral finance has helped us to identify why individuals make the investment decisions they do and how these decisions collectively impact the markets. Advisors want their clients to succeed over the long-term, and helping them stay invested in volatile markets is a key goal. However, what is often overlooked, is the impact behavioral finance has on financial product design too.

This month we’ve paired two strategists available on Communities, Orion’s robust model marketplace, that addresses both sides of the behavioral finance coin. Capital Group, the parent company of American Funds, provides investors with confidence in the most uncertain markets, while Toews Corporation designs portfolios rooted in behavioral finance theory.

Introducing “The Behavioral Portfolio”

Capital Group/American Funds “The Legendary Manager Focused on Long-Term Outcomes”

• Capital Group is a brand firm and one of the largest asset managers on the planet with close to $2.0T in assets. 
• Starting in the heart of the Great Depression, Capital Group has a history as a premier institutional active manager with a strong track record and reputation for retaining clients.
• Models are broadly diversified and focus on client investment objectives ranging from growth to income, utilizing their iconic proprietary, low-cost, actively managed American Funds mutual funds.
• While the underlying funds use Capital Group’s unique investment philosophy – including a multi-manager structure and high-conviction investments grounded in fundamental research – their asset allocation is more stable and consistent, focusing more on diversification for the long-term.
• Capital Group provides two benefits when used as the core holdings of an overall portfolio – they help take advantage of market movements and possess the potential for alpha generation given the actively managed underlying investments.

Toews Corporation  “The Behavioral Portfolio Design”

• Toews is an emerging manager who started in the mid-’90s. They focus on tactical investing, income, and behavioral finance. 
• Toews’ investment philosophy is Behavioral Portfolio Design. They build portfolios that seek to reduce risk by attempting to avoid periods of extreme losses (by tactically getting out of the markets fast) while still participating in market gains.
• Their investment approach can help risk-averse clients feel more comfortable during drawdowns while also helping risk-seeking investors take advantage of the upside – ultimately supporting the importance of staying invested for the long-term.
• Toews models are more tactical in their active management approach and have popular strategies with a strong focus on yield and income generation.
• Their strategies pair well with a more broad-based, static core as they can add more of the tactical asset allocation and diversified income focus.

Explore over 20 Capital Group/ American Funds models and 15 Toews models available in Communities. Not yet a subscriber? Let us provide you with a demo of Orion Communities.

0548-OAT-2/17/2021

Working to build custom portfolios that best align with client goals is a rewarding endeavor for many advisors, especially when you can select from an expansive universe of pre-vetted institutional strategists. Communities, Orion’s robust investment model marketplace offers just this. It gives advisors access to a variety of pre-vetted institutional strategists with the ability to easily search across multiple asset categories and filter by expansive criteria. Yet, with so many options, where do you start?

For this month’s strategist pairing, we propose you start broad and then go beyond. This month we look at the value in pairing State Street Global Advisors (SSGA), the pioneer of low-cost index ETFs, and Polen Capital, a boutique manager with a high-conviction growth strategy.

Start Broad and Go Beyond

Brand Strategist:  SSGA “Broadly Diversified Low-Cost ETF Leader”

• SSGA is a well-established brand firm, well known for pioneering low-cost index investing and being a leader in ETFs, including launching the first U.S. ETF. 
• Their models are more broad-based and diversified, utilizing a wide selection of their low-cost ETFs across equity and fixed income asset classes. 
• They offer risk-based allocation strategies in standard and tax-sensitive versions, which provide both passive and more active types of models.
• These strategies are designed to represent more of an overall portfolio’s core holdings to help take advantage of market movements while providing ample diversification benefits.

Boutique Strategist: Polen Capital “Going Beyond with a Focus on Growth”

• Polen is a boutique manager with a more active and concentrated approach to selecting high-quality individual stocks with growth potential. 
• They are a growth manager from start to finish and are focused on companies with sustainable long-term earnings growth that also display superior financial strength.
• There are various exposures for their strategies, including U.S. large-cap, U.S. small-cap, and international – all of which have been outstanding performers.
• Their strategies pair well with a more diversified passive core, as they can add more of the targeted alpha-generation potential.

With this approach, you can present your clients with a core portfolio that can be compared to a lush, diverse, and healthy forest and then focus on the uniqueness of a few of the individual trees, in this case, a boutique manager with strong roots positioned for long-term growth.

Orion’s Communities include 24 SSGA models and three – soon to be four – Polen Capital models. Log in now to access valuable information for both strategists, including fact sheets, marketing materials, and more. 

Not yet a subscriber? Let us provide you with a demo of Orion Communities.

0138-OAT-01/19/2021

Have you ever heard the saying, “Different doesn’t mean better; it just means different?” When it comes to investing, there are plenty of differences in philosophies and strategies. If you aren’t committed to one view, an opportunity exists to benefit from multiple strategists by pairing them together. 

Pairing strategists is easy with Orion Communities, a robust investment model marketplace providing unprecedented access to leading brand, boutique, and emerging strategists. Easily review models with advanced filters, pair strategists who align with your investment philosophy, update your portfolios using Orion’s trading tools, and retain full trading authority to reject or accept future strategist model changes.

This month we look at the benefits of pairing Fidelity, a well-known active strategist focused on identifying current opportunities, with Symmetry, a boutique strategist building broadly diversified portfolios rooted in academic research. 

Brand Strategist: Fidelity “Active Investing With the Cycle”

• Fidelity is a brand name well-known to clients. They take a more active investment management approach by identifying opportunities in the current business cycle.
• Fidelity’s broad lineup of models includes asset allocation portfolios, income focused models, and more targeted individual stock separately managed accounts.
• The models utilize Fidelity active and passive funds to keep costs low while adding to potential alpha generation in asset allocation and the security selection process. 
• Portfolios are allocated based on risk-adjusted return expectations using Fidelity’s time tested, active management expertise while being mindful of turnover and expenses.

Boutique Strategist: Symmetry “Factor-Based, Broad Diversification With a Tilt”

• Symmetry is a boutique manager whose models provide a more passive, broad based, well diversified, factor-based exposure for your portfolios. 
• They have a large selection of asset allocation portfolios targeting a specific equity level, which also comes in a tax-managed flavor.
• While the portfolios are broadly diversified, similar to more passive managers, factors serve as the foundation of Symmetry’s investment strategy. They continually review the leading academic work on factors, and select holdings they believe are well established sources of return above the markets.
• Symmetry is a model option for representing a core exposure in a diversified portfolio, keeping costs and taxes in mind, and pairing well with more actively managed allocations.

Orion’s Communities include forty Fidelity models and over 20 Symmetry models. Log in now to access valuable information for both strategists, including fact sheets, marketing materials, and more. 

Not yet a subscriber? Let us provide you with a demo of Orion Communities.

3351-OAS-12/15/2020

Parties tend to be more impressive when you invite various guests who create a more enjoyable and memorable experience when brought together. Like throwing a party, investment portfolios have the potential to be even more rewarding when you pair strategists who work to complement each other. Brand strategists help instill client confidence with their solid reputations and time-tested strategies. In contrast, emerging strategists can open the door to new opportunities with their unique strategies and insights. 

This month BlackRock expanded its presence in Communities with 11 new portfolio families, delivering over 50 new strategies to the platform. Julex Capital, an emerging strategist, focused on tactical asset allocation and quantitative investing, also came aboard Orion’s robust model marketplace. When these brand and emerging strategists come together, you bring a solid core to your models while leaving room to explore and add a little spice too.

Introducing The Core and Explore Approach

Brand Strategist: BlackRock “The Stable Core”

• Models deliver a more passive, broad-based, well-diversified, low cost, global exposure for your portfolio. 
• The target allocation portfolios can serve as a good foundation or starting point when combining strategies. 
• Pairs well with active and emerging managers, while BlackRock continues to provide more Beta exposure by staying optimized and focused on long-term trends.
• Multiple variations exist to suit client needs, including standard, tax-aware, ESG, and multi-manager.

 Emerging Strategist: Julex “A More Active Explorer”

• An active manager positioned to make more significant allocation changes based on market conditions. 
• More tactical dynamic models, shifting between conservative and risky assets based on signals.
• A great complement to the more passive and broadly diversified BlackRock models.
• An emerging manager, exploratory, and able to add a bit of spice to the more traditional asset allocation model.

Learn more about BlackRock and Julex Capital! Click below to watch our recent on-demand webinars with each!

BlackRock for Communities

Julex Capital for Communities

3175-OAS-11/23/2020