Investment Management Consulting in Portland, Oregon

Why People Hire Us: Investment Management

If you’re like most investors in Portland, you’ve struggled to feel good about your investing.  Is now the time to buy?  Should I just sit tight? Maybe I need to make some changes?  If you feel more like you’re winging it than working a deliberate plan, then we’ve got a solution for you.

At Interactive, our investment activities are driven by a rigorous, multi-step process. We focus on building cost-effective portfolios based on the latest academic and real world evidence on how capital markets have thrived over the years. You’ll feel confident knowing the Interactive approach is constantly optimizing your portfolio to maximize performance while minimizing risk.

We also knows that sometimes it makes more sense to sit on the sidelines than ride violent markets down. Our defensive approach uses the derivative markets to spot and avoid these violent markets. That way, you can sleep at night, knowing you’re nest egg isn’t at risk.

Interactive Wealth Advisors are  committed to helping you reach financial freedom.  If you need financial advice, please Contact Us.

Our Tactical Approach

We offer four Tactical strategies providing risk-managed exposure to US and global markets. These strategies are designed to react to short-term changes in market environments, striving to protect on the downside while continuing to participate on the upside.  This innovative, risk-management methodology is designed to distinguish between normal and potentially profitable volatility, and abnormal and potentially unprofitable volatility. It is an approach that is grounded in Nobel Prize-winning modern portfolio theory and behavioral economics.

Our Tactical strategies, utilizing our innovative, volatility-based, risk-management methodology can be effective at exiting markets before large losses materialize while providing investors the opportunity to be aggressively invested during stable and potentially profitable periods.

How It’s Different

The conventional approach used by most firms in Portland relies on correlations and volatilities being stable across their holdings.  In addition, it employs a constant allocation to low-return, fixed-income holdings.  In volatile markets, this approach provides limited downside protection as asset classes become highly correlated and drop in tandem as evidenced in the 2008 and 2001 market crashes.

Our Tactical approach expects varying correlations and volatilities across holdings.  Instead of permanent allocations to low-return, fixed-income holdings ours are temporary based on market conditions.  We rely on our risk-management process, which is designed work most when you need it.

The chart below shows one of the key relationships between risk and return.  The long-term average volatility of the S&P 500 Index is approximately 20%.  In general, when volatility of the S&P 500 Index is below 20% the index tends to rise and when the volatility is above 20% the index tends to decline.  As you can see, volatility started rising above 20% just before the 2008 market crash.  Volatility has been consistently below 20% since 2012 and the S&P 500 index has been rising ever since.  Each asset class we invest in has its own unique volatility characteristics.  We analyze each asset class to understand its long-term volatility characteristics and then take daily measurements to identify when a holding has become uncharacteristically volatile.

tactical strategies

Our Adaptive Approach

Our Adaptive strategies are designed to maintain diversification while systematically identifying and allocating to the stronger-performing asset classes and managers. As markets evolve and new, strong performers emerge, the strategy adapts.

The philosophy behind the Adaptive strategies is grounded in nearly 20 years of academic and practitioner research that demonstrates that momentum leads to trending markets (i.e. that strongly performing markets today are likely to be strongly performing in the near future.)

The research shows that momentum works broadly across asset classes including US stocks, foreign stocks, bonds, commodities, and currencies. Research in this area demonstrates that markets have exhibited statistically significant trends for well over a century going back at least to 1880.

How It’s Different

Our Adaptive strategies use a model to measure the systematic exposures and alpha of ETFs that make up the components of the portfolio. This portfolio is designed to track a global market portfolio. The algorithm then directs the portfolio to underweight the weaker asset classes and the weaker performing funds while seeking higher-alpha components across all asset classes.

Building off the global market portfolio, the Adaptive strategies are diversified across a broad basket of asset classes by investing in up to three different investment styles (index funds, smart-beta funds and liquid alternative funds).

By utilizing an algorithmic decision-making process, the strategies follow an unemotional, disciplined process that provides a consistent and repeatable investment experience.  Our quarterly rebalancing process, then analyzes a pre-qualified universe of investment choices seeking the most attractive combination of cost‑effective ETFs with the goal of managing risk while pursuing attractive return opportunities.

Our Structured Approach

Over the long term, markets work.  Our Structured strategies are built on the philosophy that a diversified, disciplined, and low-cost portfolio is the best way to leverage the power of global markets.

Nobel prize-winning economist Harry Markowitz is famously attributed with saying that the only “free lunch” in investing is diversification.  By diversifying, you may improve potential returns for a given amount of risk.  The Structured strategies are grounded in the Global Market Portfolio and are among the more broadly diversified portfolios in the market.

Research by Nobel prize-winning economists William Sharpe and Eugene Fama suggests that it’s almost impossible to consistently beat the market.  That’s why the Structured strategies follow a disciplined and passive approach to investing.  Regardless of how markets are performing in the short run, Structured stays invested and ready for long-term growth.

Structured is built using inexpensive, highly-liquid ETFs to minimize costs and help investors keep more of their earnings.  Cost is one of the single biggest factors impacting investment performance that can be controlled, and Structured aims to keep costs down without sacrificing quality.

The Structured strategy relies on time and consistent exposure to the markets.  The Structured investor is:

  • PATIENT – Structured usually is best suited for investors who believe in disciplined asset allocation and have sufficient time to make up for periodic declines.
  • RISK TOLERANT – While Structured offers six strategies with varying risk levels, it is a long-term strategy that maintains exposure to key asset classes regardless of short-term performance.
  • FEE CONSCIOUS – Structured seeks to minimize management and trading costs, which may reduce a portfolio’s performance, thus allowing investors to realize more of the potential benefits of long-term growth.

Learn How Our Different Approaches Could Help Your Investments with a complimentary consultation.

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