Investment Strategy/Results

  • Why an absolute return strategy?
  • Delivering Absolute Returns in retirement account
  • Performance

Absolute Return investments attempt to make a profit every year even if the stock or bond market loses money.   Absolute Return is a new term for most investors and retirement plan owners.  However, Absolute Return investments are a component of the most successful investment programs in the country. These include Harvard and Yale endowments, large pension plans and insurance companies.   

In theory, everyone wants to be an Absolute Return investor.  Everyone wants their retirement plan to make a profit each year.  The reason we pursued an Absolute Return strategy since 1999 is to improve the odds our clients can retire or be financially independent on time.

We pursue an Absolute Return strategy in an effort to avoid large losses each year that kill compounding of our funds.  If we can avoid large losses like 2008 and 2000-2002, we can grow our monies much faster than traditional investments. Not to mention avoid an incredible amount of emotional and financial stress.

Please take our course on Absolute Returns for Retirement Plans to get a deeper and better understanding of the risks to your retirement and how to grow your retirement plan even if market returns are below average.

While we all want to be an Absolute Return investor and make a profit each year, delivering these return is another story.

Absolute Return hedge funds, mutual funds and exchange traded funds (ETF) pursue Absolute Returns in similar ways.   These funds use leverage or borrow to increase their buying power, they can sell short, use derivatives, options, and other tools like contract for difference.

However, retirement accounts cannot borrow or use margin and cannot sell stocks or funds short.  In fact, just about every strategy used by these funds is not allowed in an IRA or retirement plan.  

I think this perceived weakness has turned into our strongest asset. All research, development and testing must be done in house from scratch. No certification, course or book exists on how to do well in a losing decade for the stock market or how to make a profit when the market loses 35% in one year. Instead of blind acceptance of  financial industry marketing, we took apart every part of the retirement investing problem. As a result, we came up with a different conclusion and different answers to the same questions.

As a result, our investment strategy is unique and was developed just for retirement plans.

Absolute Returns cannot be delivered by traditional investment strategies like traditional asset allocation, lifestyle or time based funds. If we want to be profitable in years like 2008, we have to think about the investment problem differently.

No investment strategy is perfect and ours is no different.  Absolute Return strategies can and will have losing years, however over long periods of time a good Absolute Return strategy should be able to generate positive returns when traditional strategies cannot. The losing decade of 2000-2009 is a good example of when Absolute Returns strategies could have saved many retirement plans. The bottom line is if absolute return strategies cannot improve returns during losing or low return periods for traditinal investments they have limited if any value.  This is why mutual fund and exchange traded absolute return funds have a poor reputation and why we don't use them.

 In addition, we are one of the few advisors in the country to make our performance history public. It was an easy decision as we would never hire an advisor, planner or manager without this information. Past performance does not predict future performance, but it does tell us about investment decisions  during losing periods.  Every study on investor behavior shows how investment decisions made during losing markers hurt investor performance.   The other reason track record are very important is change. The stock market is very different today compared to the 1990's and it will be different in the next decade.  Performance histories show what changes were made if any to investment strategies. Performance histories show if adviors repsonded with innovation and research and if that research was successful.  Performance histories also show if nothing was done to add value or to reduce losses.

Please take our course on Absolute Returns for Retirement Plans to learn how to evaluate advisor and fund performance as it relates to your retirement plan goals. 

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Take the “Absolute Returns for Retirement Plans” three part video course and improve your odds of retiring on time and staying retired.