News Mentions & Press Releases
Psychology has infiltrated the field of financial advice and does not appear to be stopping its influence any time soon. This makes sense. With the popularity of outsourcing money management on the rise, many financial advisors are finding that their most valuable offering is the management of client behavior.
Every advisor seems to have his or her own story that underscores this point. The client temptations always vary — reaching into a 401(k) too soon, taking on unnecessary debt, dipping into savings, etc., but the image that advisors create is always the same: taking off their businessperson hat and playing the role of a psychologist.
CLS Investments, LLC (“CLS”), a third-party money manager and leading manager of exchange traded fund (“ETF”) portfolios, announced today that it won the 2018 WealthManagement.com Industry Award for ETF Strategist. Now in its fourth year, the WealthManagement.com Industry Awards is the only awards program to honor outstanding achievements by companies and organizations that support financial advisor success.
CLS was awarded ETF Strategist of the year for its Smart ETF Models, which utilize products from five ETF providers at a zero-percent strategist fee. These first-of-their-kind models focus on active and smart beta ETFs, which have historically demonstrated a bias to outpace the market over time. CLS manages these models with their disciplined and active Risk Budgeting framework, with a continued focus on the global market.
CLS also provides clear and consistent information to advisors and investors to strengthen conversations among the two parties and keep investors on course. CLS offers advisors and investors a variety of tools including innovative video statements, an engaging online portal, weekly multi-media commentary, and more. CLS manages nearly 45,000 investor portfolios through partnerships with over 6,000 financial advisors and 1,500 qualified plan sponsors.
This information is not complete without these disclosures: http://bit.ly/2xgYxMv
Recent surveys have shown that investors consider a variety of criteria when shopping for an ETF. But the most popular consideration—cost—is often overemphasized, while the most important is overshadowed.
When selecting an ETF, or any investment for that matter, the most important criterion should be desired market exposure. Investors should consider what exposure is needed for the portfolio and what is appropriate for the overall allocation. They should also consider the expected risk and return, and how the ETF will mix with other existing holdings.
Desired market exposure, however, is typically far down on many investors’ lists of key selection criteria. At the top, instead, we often find cost as a top consideration.
With the end of the tax year a few months away, it is never too early to plan ahead with exchange traded funds.
On the upcoming webcast, Tax Loss Harvesting: What You Need to Know, Matthew Bartolini, Vice President and Head of SPDR Americas Research at State Street Global Advisors, Joshua Jenkins, Portfolio Manager for CLS Investments, and Blaine Docker, Chief Operating Officer at Main Management, will discuss the current status of the fixed-income environment and consider ways to incorporate ETFs as a means to effectively harvest potential losses.
Fixed-income markets struggled as the Federal Reserve hiked interest rates. The declines, though, might have a silver lining as they present the opportunity for investors to exercise effective tax management and make prudent use of unrealized losses.
Historically, ESG—environmental, social and governance—strategies have focused on excluding shares of firms that don’t meet their standards, such as companies involved in tobacco, firearms or alcohol. Yet, an exclusionary strategy doesn’t always mean portfolios contain the best ESG options. To counter this issue, CLS Investments developed an ESG strategy that prioritizes the selection of strong ESG investments rather than focusing on avoiding non-ESG ones.
“What we’re saying is let’s go and look for the good things—the companies that are environmentally conscious, socially responsible and exhibit sound governance,” says Ryan Beach, CEO of CLS Investments, an investment management company based in Omaha, Neb. “We believe that these high quality companies typically provide increased stability and have the potential to outperform over time.”
The second quarter was great for the U.S. stock market, but not all equity asset classes participated to the same extent. The dispersion was impressive, and going forward, some of these segments offer opportunities for investors.
Growth stocks, for instance, such as those in the technology and consumer discretionary sectors, handily outperformed value, such as financial stocks. Value stocks continued a streak of underperformance essentially dating back to before the financial crisis.
The recent quarter also proved trying for international equities. In fact, it was one of the worst three-month stretches versus the U.S. stock market in some time. Rolling three-month performance over the past few decades shows the recent degree of underperformance measured a whopping two standard deviations—something that has only happened 2% of the time. In other words, one should expect a quarter of such poor relative performance to happen only once every 12.5 years.
Over the past several months, the industry has experienced growth in advisor tools and resources that help them leverage insights from the academic field of behavioral economics, and the trend isn’t likely to slow down anytime soon. In fact, as the roller coaster of investor emotion continues, the popularity of behavioral economic research and development of tools is likely to surge through the end of 2018 and beyond. This relatively new approach to managing investor emotion is gaining in popularity due to the obvious fact that humans are emotional and often struggle to make decisions that will impact their economic future.
The awareness of human fallibility is not new to financial advisors, but the emergence of science-based resources that can be used in practice is new. I emphasize “science-based” as there are several gimmicky behavioral finance resources that purport to be useful but fail to stand up to the rigor of scientific methodologies. In contrast, notable examples of quality, science-based efforts include Morningstar’s investment in their behavioral science team and Kaplan University’s collaboration with Think2Perform.
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ETFs are a modern marvel, allowing investors to allocate to exposures such as individual countries of all shapes and sizes, including Turkey, through the iShares MSCI Turkey ETF (TUR). Turkey has been beaten up, no question about it, but is the time right to be adding exposure? Let’s try and evaluate that without any discussion about geopolitics, just by looking at the data.
Are valuations attractive?
Of course they are, price-to-sales and price-to-book relative to MSCI ACWI and compared to the historic average since 2001 would suggest that this is the most attractive opportunity we have seen.
Biotechnology stocks were some of the strongest performing stocks from 2009-2015. Then, the biotech bubble burst and just about every major biotech stock plunged into a private bear market. Since then, biotech stocks have bottomed and are now rallying once again. Valuations and sentiment have been reset which opens the door for higher prices. That said, here are two common mistakes investors make when investing in biotech stocks.
Avoid The One Hit Wonders:
Biotech companies come in all different shapes and sizes. One big mistake investors make is that they see a company with one hot drug and they think that is enough to change the world. The problem many companies face is that they need to innovate to stay relevant in the long run. I spoke to Joshua D. Goldman, PhD, CFA who is a Partner and Director of Research at Taylor Wealth Management Partners and he prefers to avoid companies with only one drug candidate and told me, “An investor should favor companies that have a core technology which is already proven safe and potentially hints at being effective i.e. a therapy based on this core intellectual property has already made it beyond phase I and hopefully phase II clinical trials. This should increase the chance that other drugs based upon the same core intellectual property are also safe. If there are many drugs in the pipeline based on the same platform, than an investor has “many shots on goals” thereby increasing the likelihood of success.“
Netflix is an impressing stock. Despite some recent turbulence, its returns make even its FANG (Facebook, Amazon, Netflix, and Google parent Alphabet) counterparts pale in comparison — a 10-year annualized return of 59% (that’s more than 10,000% cumulative)! All the FANG (or FAANG or FAAMNG) names have been remarkable for investors; although, it’s unlikely many have weathered the volatility. Each FANG stock has had a drawdown of more than 60% (except Facebook, which went public most recently and has only had a 40% drawdown so far), with three members experiencing peak-to-trough declines of 80% or more. But despite those large drawdowns, investors are attracted to the allure of picking a lottery stock or two and sailing off into the sunset.
Without the benefit of hindsight, how realistic is investing in a Netflix, say 10 years ago, and holding that stock until today? In investing, time is very much your friend. It’s often shown that over long periods, say 10 years or more, stocks are positive an overwhelming majority of the time, which is true and great! But that analysis is typically based on broadly diversified index returns. Choosing a less diversified group of individual stocks can become more challenging than many think, even with time on the side of investors.