Our Approach

Our ‘Barbell’ approach to portfolio management keeps us focused on your long-term objectives while providing flexibility to capitalize on shorter-term opportunities. Our role in portfolio management includes empowering our clients through education, to help them avoid those behavioral mistakes that make staying true to the plan a daily battle. By stripping away the mystery around modern portfolio theory, asset allocation and security selection strategies, we reveal a sophisticated, flexible, disciplined approach that is academically structured and based on solid empirical data—not hunches, hopes or unproven theories.

At WT Wealth Management, the strategic side of the Barbell focuses on finding low-volatility strategies for investment in high-quality, defensive-oriented companies with traditionally more stable earnings and reputable cash-flow histories. This strategic side gives our clients broad-based market exposure with:

  1. typical allocations to large-cap, mid-cap and small-cap securities;
  2. exposure to international securities in both developed and emerging markets; and
  3. volatility-dampening asset classes: government bonds, corporate bonds, senior secured loans, treasury inflation-protected securities (TIPS), preferred securities, real estate investment trusts (REITs), higher-yielding cash alternatives, etc.

Extensive research shows that, over full-market cycles, low-volatility strategies can provide competitive risk-adjusted returns by providing downside protection, along with meaningful upside participation (upside/downside capture ratio). Notably, recent research and empirical results suggest that low-volatility strategies do not detract from returns in order to lower risk. Such strategies can thus replace existing typical market-exposure investments in portfolios without sacrificing return potential and, in many cases, outpacing such traditional benchmarks as the S&P 500, the S&P 400, and the MSCI EAFE Index.

While lowering risk is valuable to nearly every investor, one must avoid large drawdowns (see our website’s ‘Limiting Loss’ section). These are particularly damaging for investors, because they tend to occur during periods of economic stress, hence create challenges for investors to stay committed to their long-term plan.

We believe that investors with a strategic allocation to low-volatility strategies improve the asset allocation efficiency of their portfolios. In a sense, low-volatility strategies provide benefits similar to those gained from implementing a portfolio hedge or using alternative investments that have become all the rage. However, unlike traditional portfolio hedges and alternatives, research indicates that low-volatility strategies do not extract a premium (excessive cost) for this protection.

This counterintuitive feature is what makes low-volatility strategies particularly attractive. However, like all hedging strategies, investors need to hold them during dark periods and before they are needed, in order to realize their true benefit. For all of these reasons, we believe that all investors should have exposure to low-volatility strategies as part of the long-term strategic allocation component of their portfolios.

On the tactical side of the Barbell, we attempt to capitalize on cyclical biases by exposing the investor to sectors in which the greatest opportunity for capital appreciation appears to exist based on where we lie within the economic expansion and contraction cycle. Again, empirical data and extensive research have shown that many sectors have a history of outperformance, depending on where in the economic cycle our nation lies.

In addition to sector exposure, we use the tactical side of the Barbell for exposure to individual equities. We thoroughly research companies that fall into a category we have coined “Cultural Demographics” in order to capitalize on that category. These equity selections are usually industry leaders with wide moats who have embedded themselves into our daily lives to the extent we have taken them for granted.

These equities often provide the high growth (high alpha) component to the investor’s portfolio, but inherently come with additional volatility. But, as with most investment issues, if these equities are down within the framework of a larger asset allocation model and within your personal risk-tolerance framework, they can lead to above-average returns on the tactical side of the Barbell.

This unique combination of broad-market, low-volatility investments on the strategic side of the Barbell, coupled with culturally important high-growth investments and timely sector selections on the tactical side, separates WT Wealth Management from the competition.

WE BELIEVE in transparency and that you have the right to ask questions, challenge our beliefs and receive forthright responses in those engagements.
©2018  WT Wealth Management. All rights reserved.



There are no warranties implied.
Any opinions expressed on this website are the opinions of WT Wealth Management and its associates only. Material listed on this website is neither an offer to buy or sell securities nor should it be interpreted as personal financial advice. You should always seek out the advice of a qualified investment professional before deciding to invest. Investing in stocks, bonds, mutual funds and ETF’s carry certain specific risks and part or all of your account value can be lost.

At WT Wealth Management we strongly suggest having a personal financial plan in place before making any investment decisions including understanding your personal risk tolerance and having clearly outlined investment objectives.

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