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In this episode, we explore the concept of portfolio diversification by way of capital-efficient investing, through a strategy coined 'Return Stacking' and how historically, institutions have traditionally had more access to sophisticated strategies than retail investors and financial advisors. That has changed in the last 2-3 years with the advent of the introduction of ETF wrapped strategies now available to retail investors.
We discuss why diversity and prudent use of implicit leverage are important factors in investing, and how adding leverage to an asset that is already expected to outperform cash can increase excess expected returns. We touched on the performance of a 60/40 portfolio and why adding something to the portfolio that will diversify and have positive expected returns may be beneficial, particularly if you don't have to trade down or out of core model portfolio allocations.
We also discuss the 2022 market environment as an example of a growth down/inflation up environment and how using capital efficient ETFs can allow investors to introduce a diversifying secondary return stream and enhance returns, without introducing tracking error risks.
The episode also covered the lack of building block solutions in the ETF space, led Newfound Research to partner with Resolve to bring several ETFs to market. The ETFs, called "Return Stacked," were launched in February 2022, offering diverse combinations of stocks, bonds, and alternative trading strategies as building blocks for diversified portfolios.
Both Newfound Research and ReSolve Asset Management understand deeply the importance of education, which is why we prioritize engaging with the advisor community and providing accessible content.
We encourage you to reach out to us via LinkedIn, Twitter, or our websites (Newfound.com, InvestReSolve.com and Returnstacked.com) with any questions or comments.
We hope this episode provided valuable insights and tools to help you make informed investment decisions.
Thank you for tuning in, and we look forward to bringing you more unique perspectives in future episodes.
Timestamped Highlights:[00:07:24] "ETFs: Key Driver in Evolution of Investment Strategies" [00:14:10] The Capital Efficiency Strategies of Institutions Explained [00:24:15] "Unlocking Capital Efficiency through Alternative Investments" [00:35:39] "Exploring how investments respond to economic environments" [00:38:34] "Managed Futures and Systematic Macro: Diversification Done Right" [00:43:47] Newfound and ReSolve Launches ETF Building Blocks for Advisors. [00:48:37] The Pros and Cons of Leverage in Investing [00:59:51] "Understanding Hurdle Rates and Leveraging Investments" [01:04:05] "Efficient markets drive fair compensation for risk" [01:16:37] "Maximizing Advisor Allocation with Passive Investments"
Where to find Corey Hoffstein, Rodrigo Gordillo, ReturnStackedETFs.com
Return Stacked ETFs
Corey Hoffstein on Linkedin
Corey Hoffstein on Twitter (@choffstein)
Rodrigo Gordillo on Twitter (@rodgordillop)
Where to find the Raise Your Average crew:
ReSolve Asset Management
ReSolve Asset Management Blog
Mike Philbrick on Linkedin
Rodrigo Gordillo on Linkedin
Adam Butler on Linkedin
Pierre Daillie on Linkedin
Joseph Lamanna on Linkedin
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