Sungarden Institutional: why consider it
A description of the updated Sungarden Institutional portfolio service
YARP: dividend stock investing…with a twist
YARP is a dividend stock selection process called YARP (Yield At a Reasonable Price) that prioritizes risk management and total return. YARP aims to identify stocks with historically high dividend yields that are currently undervalued and have the potential for price appreciation.
We have an entire tab devoted to the YARP methodology, so please refer to that area of the site to learn more, and keep up with our latest YARP news and research!
Core ETF: our flagship conservative approach
Sungarden believes in investing the way we are taught to drive: defensively. As in driving, defensive investing aims to reach the destination safely, without accidents. Since the late 1990s, Rob Isbitts has managed the Core model portfolio, and evolved its approach as markets have changed. It has helped investors practice defensive investing by solving the major investment issue of our time: replacing what bond portfolios used to do, but no longer do effectively. Core does this without resorting to annuities or opaque, illiquid strategies. It's a tactical, daily-liquid portfolio of 8-10 ETFs, and may use options in small size.
ROAR: a simple balance of reward and risk
Albert Einstein said “life should be made as simple as possible, but not simpler.” Our 2-ETF portfolio is not designed to be a total answer, but honestly, sometimes we wonder!
This is A simple, yet effective way for our subscribers to get a "snapshot" opinion about where we believe reward potential and risk potential are in balance. It starts by taking our ROAR Score, which asks "if you had a $100 portfolio, how much of it would be playing "offense" and how much would be allocated to playing "defense." Every Tuesday (and at times of extreme market circumstances) we update the ROAR Score and, if we determine a change to the 2-ETF model portfolio is required, we announce that change as well.
Free and premium subscribers to ETFYourself.com receive an alert each Thursday with the updated ROAR Score and 2-ETF model portfolio, which is always a mix of SPY (S&P 500 ETF) and BIL (1-3 month T-bill ETF).
For Institutional subscribers we take the 2-ETF model a step further, choosing from 1 of 4 offense ETFs (which are all US stock index funds) and 1 of 4 defense ETFs (which are all focused on owning US T-bills, short-term US Treasury bonds, or a laddered US Treasury portfolio (0-30 years to maturity).
Sungarden Institutional: a complete portfolio in 3 parts
1.The YARP stock portfolio (35% of the total) is a long-term oriented stock portfolio, but with additional features that involve trying to hedge and enhance returns using options, and tactically adjust the stock weightings.
The Core portfolio (now 40% of the total) is all-ETFs except for a put option position. This portfolio is defensive-minded, and I’ve run it in different forms for about 25 years. It is defense first, and during the years when bond rates were near zero, this offense-defense mix, tactically managed, was an effective replacement for what bonds used to do. Now that yields are back up, that’s just another asset to use in allocating and rotating this portfolio, making it even more flexible than before.
The last segment of the total portfolio (25% of it) is what I’d call a “completion” portfolio to the other 2. This 3rd segment allows me to use 1/4 of the portfolio to continue to prove out my belief that a lot of investing is made way too complicated. Sure, I think a YARP portfolio and CORE portfolio are essential to my long-term approach. But I also believe that a simple offense-defense mix, rotated whenever I think it should be to keep things in balance, and typically using 1 ETF at a time for offense and 1 ETF at a time for defense, has already been a huge help to me in my semi-retirement. I will at times add a 3rd position here, but it will be much smaller than the 2 core positions and intended to try to “juice” returns when I feel markets are at extremes.
Putting it all together
If someone asked me, “Rob, how do you invest in stocks?” I’d point to the YARP portfolio. If they asked “how do you invest in bonds?” I’d point them to the CORE portfolio, and note that it is not a bond portfolio per se, but aims to offer a lower volatility total return approach, like bonds used to.
And for those who might ask, “2 ETFs, is that all you have for 25% of the portfolio?” my response is that the era of ETFs has made it so that it can be that simple, at least for 1/4 of this set of strategies. Markets are so correlated so much of the time, that balancing reward and risk does not have to be complicated in structure, as long as I have the ability to shift the balance (allocation between offense and defense) at will. And I do!
This portfolio represents the vast majority of my liquid assets.
The 2 parts you don’t see here…
…as it makes no sense for us to charge a subscription fee for these, are:
A slug of Treasury securities (T-bills and/or short-term bonds out to 2-3 years maturity) which throw off lifestyle income and are used as a cash reserve.
A very small (2-3% of total liquid assets) “Spec” account (short for speculative). This is my go-anywhere trading account. Options, ETFs, levered ETFs and stocks. Positions held for weeks, days or even intraday when it makes sense. Goal: take some big shots with a small amount of money, but as with everything else, the aim is to avoid having even this small sum evaporate. This tends to be as active as market volatility is. As such, it is not something we offer through the main service, though we are working on a way that this model can be accessed through an established, outside platform for model signal traders. More on that if/as it develops.