“Growth” and “Wealth Preservation”
Successful investing requires an important core decision: the extent to which your portfolio should be clearly allocated toward “Growth” or “Wealth Preservation.”
Many investors languish between the two – with results that are mediocre at best. Keith will help you objectively make that core decision. Using our innovative, proven ETF “sub-portfolios,” we will allocate your portfolio from there within your “Wealth Barbell.”
Why We Use Exchange-Traded Funds (ETFs)
An exchange-traded fund (ETF) is a collection of stocks, bonds or other assets designed to faithfully track an underlying index in a transparent and cost-efficient manner. Here are some of the many advantages offered by ETFs:
- Better performance. Over time ETFs outperform the great majority of Mutual funds that compete against the same index.
- Automatic Diversification and Reduced Trading Expenses. A single ETF permits us to invest in an entire market or sector – with a single low-cost transaction. This greatly reduces costs, and reduces
the organization risk associated with buying individual stocks or bonds.
- Less Expensive. ETFs are significantly less expensive than actively-managed mutual funds.
- Tax Efficiency. ETFs are typically much more tax efficient than mutual funds.
- Liquidity. ETFs may be traded like stocks throughout the day. Mutual funds may only be traded at the end of each day.
- Transparency. ETFs are far more transparent than mutual funds.
Our Simple Approach: Barbell Investing
We Manage Our Proven Sub-Portfolios on Each Side of Your Wealth Barbell
Break it all down and ultimately there are only two types of portfolios: “Growth” and “Wealth Preservation.”
“Growth” is commonly associated with equities and with certain more volatile alternative investments such as, for example, real estate or pipeline partnerships.
“Wealth Preservation” is commonly associated with fixed income, cash and other less volatile or “inflation hedge” alternative investments such as, for example, precious metals.
Each of our 15 low-cost, risk-adjusted ETF portfolios is weighted, like a barbell, between “Growth” and “Wealth Preservation.”
At FEE-ONLY DCM, in cooperation with our colleagues at Efficient Market Advisors (EMA), we allocate our 15 portfolios across the four major investment asset classes: equities, fixed income, alternatives and cash.
Within our more aggressive portfolios, we lean more heavily toward growth assets; and within our less aggressive portfolios we favor assets associated with wealth preservation. Based on historical returns, the more a portfolio is allocated toward growth the greater is its potential return, but the more volatile it can become. The reverse is historically true with portfolios allocated more toward wealth preservation.
Each of our portfolios presents its own range of historic volatility. Each has a more than ten-year GIPS-compliant performance and volatility track record. At your Suitability Interview with Keith, you will decide together on the volatility range most appropriate for you in pursuit of your longer-term investment objectives. Our goal is to assume no more volatility than necessary in order to accomplish your objectives.
Our fees are the same regardless of the portfolio you select. There is no hidden agenda. Our only priority is to ensure that we select the portfolio that best fits your needs, and that it performs in a manner consistent with your realistic expectations.
After strategically allocating across diverse asset classes, our investment committee makes tactical selections within specific markets, sectors and industries, in the U.S. and around the world. Here we objectively weigh fundamental, technical, economic and public policy factors as we rotate among the world’s most promising markets.
But there is much more, as we seek to defend your portfolio…
Successful investing is not just about what you make when markets rise. It’s about what you keep when markets decline.
By far, your best risk-control mechanism is proper portfolio selection – choosing the diversified portfolio that is right for you. That is precisely why we maintain 15 carefully risk-adjusted ETF portfolios, and why portfolio selection based on your needs will be a major focus during your Investment Suitability Interview with Keith – and thereafter should your personal circumstances change.
In addition to this most-important risk-control mechanism – portfolio selection – exclusively at DCM we will also go completely or partially to cash, or take other defensive actions when circumstances warrant.
Recognizing that each risk-adjusted portfolio has a “normal” historical range of volatility (a single standard deviation), at DCM we may take additional defensive action on your behalf when, in our opinion:
- It is more likely than not that your portfolio will decline outside of a single standard deviation of volatility; AND
- It is more likely than not that your portfolio will not recover to within its historical single-standard-deviation range within 90 days.
Our additional defensive measures may include:
- Taking one or more individual ETFs to cash;
- Taking one or more of the asset classes in your portfolio to cash;
- Moving all clients within one portfolio to a historically-less-volatile portfolio; or
- Going entirely to cash.
But defense is a two-part decision: when to get out and when to get back in. We apply objective, ongoing diagnostics to make that decision.