FREQUENTLY ASKED QUESTIONS
What makes CONCERT a better way to invest?
With CONCERT, your investment will always favor the optimal risk adjusted markets. As an example, consider Emerging Market indices and the large Exchange Traded Funds (ETFs) that track them, such as EFA & SPY. You have the diversification benefits of CONCERT... however, your exposures will change as market risks and prices change over time. The best strategy may be exiting the ETF for a country entirely. We seek to maximize the upside, eliminating components that could erase profits by parking the assets in cash until it is statistically safe to resume utilization of the component.
Managing investment through risk is transformational. How big is the idea and what will be the impact on the industry?
Investors care about investment risk first and foremost. To determine a client's risk tolerance - we ask how much the client is willing to lose. With CONCERT, the industry finally has a methodology addressing this most important priority: risk...
Markets and the risk profile of investments change daily. Static portfolios do not adjust - they simply take a beating when environments becomes hostile. Investing doesn't have to be done this way. Technology enables us to understand and track market characteristics at a much deeper level. We are tactical with investment exposures to stay in tune with the times. To use an analogy, think of the difference between using a Farmers' Almanac to predict the weather versus the dynamic display of Doppler Radar. We don't rely upon short, medium or long-term forecasts to determine our allocations. Instead, our decisions are dependent upon daily risk-centric monitoring, facilitating an agile and adaptive methodology.
What does "Stay in Tune" mean?
This means adapting to the ebb and flow of market dynamics. We find the best risk-adjusted returns at the moment, which greatly enhances overall portfolio performance, and provides what investors want - capital preservation.
What happens when investments turn sour?
The client's portfolio is quickly re-balanced to minimize negative returns. Assets are allocated to better opportunities, or if none exist, to cash. Our algorithms "ride out the storm" - then get back in the game at the optimal time to resume aggressive growth.
What is different about how you manage money?
We do not make forecasts about fundamental factors, such as earnings, or the direction of investment markets. Instead, on a daily basis, we interpret risk and make trading decisions based upon volatility, correlation, pace of change, and other selected statistics. Ferrell Capital Management LLC performs fundamental risk analysis. We believe our methodology is revolutionary because it challenges widely held beliefs and incorporates data overlooked by most managers. We think differently...
Do you diversify by using bonds and cash?
These are the traditional means of reducing or managing risk. However, it can be shown that diversification doesn't work when markets become highly correlated or the relationships between markets change. And today, with low interest rates, an investor needs an alternative to safe-havens with zero or negative real returns. We will use bonds and cash but only when our model cannot find more attractive risk-adjusted equity investments.
Is CONCERT a strategy or methodology?
CONCERT is a methodology. We can apply our methodology to any asset class - as long as ample dispersion exists between the investment components. Thus CONCERT can be applied to many asset classes, but not to all. (As an example, a U.S. Treasury strategy does not make sense due to the low volatility and high correlation of the market).