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Individual Assets or Diversified Strategies?

Individual Assets or Diversified Strategies?

Individual Assets or Diversified Strategies?

The Final Lap of 2023

As potential for market volatility looms amidst continued rising rates and geopolitical conflict, we believe investors are faced with a dilemma – do you expend the time to research individual assets for opportunity or do you pay for portfolio models, which may include additional expenses from the investment vehicles used?  During times of turbulation, we believe it typically serves investors well to be highly diversified.  Because of this, it may require extensive time conducting research to build a portfolio of securities if one were to choose to manage their investments themselves.  Alternatively, purchasing a portfolio of exchange traded funds or mutual funds may erode your return potential due to management fees charged on the funds themselves.

How Each Approach Compares

Let’s first pinpoint how we define volatility.  Volatility, which is a measurement of how swiftly prices move in the market, can be measured in a variety of ways.  One way that many investment professionals measure volatility is through the Chicago Board Options Exchange Volatility Index (the “VIX”), which measures the short-term options activity in the S&P 500 Index.  The greater the price in the VIX, the greater expected market volatility.  We believe that a price of $30 or higher in the VIX is an indication of high volatility.  We do not have to look far back to see the last time that occurred (September 2022):

Source:  Bloomberg LP.  Graph depicts the daily price of the VIX from 10/24/21 through 10/24/23.

As we discussed, we are trying to determine if a broad portfolio of securities serves investors better than trying to identify individual securities during times of volatility.  As a barometer, we will measure the S&P 500 Index, which is a composition of U.S. large cap securities, versus popular individual securities in the months following the VIX surpassing $30.

Source: Bloomberg LP. Graph depicts the overall return of the S&P 500 Index (“SPX Index”), Facebook (“META”), Microsoft (“MSFT”), and Apple (“AAPL”) for the period between 9/30/2022 and 12/30/2022.

As you can see from the above chart, the S&P 500 Index (“SPX Index”) outperforms each Microsoft (“MSFT”), Apple (“AAPL”), and Facebook (“META”); which represented 3 of the top 10 holdings in the S&P 500 Index as of 09/30/2022, individually in the months following the VIX surpassing $30.  We believe this is just one example that supports the thesis that a broader array of securities may be more beneficial compared to individual securities in times of volatility.

What to do

As of 10/23/23, the price of the VIX was $20.37, which suggests little to no volatility is expected in the market.  However, as you can observe from the VIX chart above, those circumstances can change rather quickly.  Given the current macro environment between the uncertainty in federal monetary policy as well as escalating geopolitical conflict, we believe volatility may rear its ugly head sooner than later.  Because of this, we believe utilizing a diversified portfolio of securities is generally better suited for investors than attempting to research and select stocks individually.

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Kevin Battista

VP of Product

Kevin leads Artha’s product, design, and SCRUM teams and his responsibilities include overseeing the strategic vision of Artha, the product roadmap, the end-to-end user experience, as well as the delivery cycles. With 12+ years of experience in product development and product design, Kevin has developed and implemented creative solutions that have solved countless problems within the FinTech community. He’s built software that’s used in the largest financial institutions in the U.S. and has successfully led teams through the product development lifecycle, resulting in multiple acquisitions and exits. Kevin has a B.S. in Finance and Information Technology from Virginia Tech and an MBA from Wake Forest University.

Natallia Sakharuk

VP of Quality Assurance

Natallia is the VP of Quality Assurance at Artha who leads with a commitment to elevating product and service quality across the organization. She possesses a deep understanding of quality methodologies, industry standards, and is recognized for her strategic vision, a data-driven approach to decision-making, and her unwavering dedication to upholding the highest standards of quality in all aspects of the business. With over 8 years of dynamic experience in QA, she successfully orchestrated quality initiatives in FinTech and Corporate Real Estate projects resulting in enhanced product reliability, reduced defects, and increased customer satisfaction. Natallia holds a B.S. in Economics & Logistics from Belarusian State Economic University, a B.A. in Foreign Language from Academy of Postgraduate Education, is certified by ISTQB (International Software Testing Qualifications Board), and she has continued to stay at the forefront of industry advancements by attending workshops, seminars, and conferences.

As a trusted leader, Natallia is poised to drive Artha’s quality assurance initiatives to new heights, ensuring a lasting impact on both customer satisfaction and business growth.

Alexandre Junges

VP of Engineering

Alexandre leads Artha’s development team, collaborating closely with developers and software engineers to architect and construct a robust application that aligns with business requirements, prioritizing security, performance, and scalability. A fervent technology enthusiast, Alexandre is committed to enriching lives through innovative solutions. With over a decade of experience in application development spanning diverse industries, he holds a B. Tech. in Analysis and Systems Development from Unisinos, a Project Specialization from UFRGS (both universities in Brazil), and he is a Certified Microsoft Professional.

Justin Lowry

President And Chief Investment Officer

Justin Lowry is the President and Chief Investment Officer of Global Beta Advisors. Justin’s responsibilities include the oversight of investment activity, market research, and product development at Global Beta Advisors. Justin joined the firm as an executive member upon its foundation. Prior to working at Global Beta Advisors, Justin worked at Oppenheimer Funds as Head of Research and Product Development for its Beta Solutions exchange-traded fund business from 2015 until 2017, which at the time, held over $2 billion in assets in the Revenue Shares ETF suite. One of the cornerstone ETFs in the business, RDIV, won the ETF Innovation “Smart Beta ETF of the Year” award (Click here for more information about the award, contestants, and its qualifications). From 2010 until 2015, Justin served as CIO for Index Management Solutions, a subsidiary of VTL Associates, where he served as a subadvisor, providing custom portfolio solutions, portfolio management, and trading services to many ETF issuers that summed to $2 billion in management. Those funds included the Revenue Shares ETFs, KraneShares China ETFs, and several ETF issuers who launched their funds through Exchange Traded Concepts. Prior to the inception of Index Management Solutions, Justin worked as an analyst at VTL Associates since 2008. Justin earned his B.S. in Business Management from Saint Joseph’s University.

Vince Lowry

CHAIRMAN

With over 40 years of experience in the financial industry, Vince Lowry has built a distinguished career as an Investment Advisor. He began his journey in 1984 at Shearson Lehman, where he quickly established himself as a leader in the field. Over the next two decades, he grew his investment business to an impressive $20 billion in assets under management (AUM). Vince attributes this success to using modern portfolio theories as he was an early adopter of global asset allocation for diversification as well as utilizing advances being offered by technology.

In 2004, Vince and his team departed from Smith Barney Citigroup to launch their own Registered Investment Advisor (RIA) firm, VTL Associates. Over the next 11 years, they continued managing client assets while also developing an ETF family of funds known as RevenueShares.

One of Vince’s most notable achievements came in 2009 during the financial crisis. As the Investment Advisor to the Pennsylvania Treasury, he recognized an opportunity amid market turmoil. He advised the Treasury to leverage the New York Federal Reserve’s TALF program, investing in CMOs, ABS, and other distressed yet highly rated fixed-income securities. This strategic move resulted in a remarkable $3 billion gain for the Pennsylvania Treasury within just nine months.

In 2015, Vince and his team sold VTL Associates to Oppenheimer Funds, a subsidiary of MassMutual. Over the next two years, they played a key role in expanding Oppenheimer Funds’ ETF business. By August 2017, after fulfilling their obligations under the acquisition agreement, Vince and his team set out on a new path. Recognizing the agility of smaller firms, who are better positioned to explore and create creative strategies by embracing the rapid changes in the world of technology, they launched a new venture focused on delivering investment advice through innovative technology-driven solutions.

Vince Lowry continues to be a thought leader in the industry, leveraging decades of expertise to navigate the evolving financial landscape and drive meaningful results for his clients.