Wednesday, 08 May 2013 12:57 admin
In The Invesco PowerShares ETF Monthly Report, Connection, Mitch Reiner talks about the focus of Wela’s ETF strategies. Wela stands as a benchmark in ETF income and total allocation strategies that are currently being used across a variety of custodian platforms. Mitch attributes the success and popularity of Wela’s ETF strategies to their flagship strategy, the Agg Yield.
ETF Strategist Interview:
Wela Strategies Wela Strategies is an ETF Strategist firm in Atlanta, GA. Wela focuses on income and total allocation strategies for investors of all sizes. Advisors are using Wela’s strategies across multiple platforms including Envestnet, Placemark and other major custodians. Mitch Reiner is a founder and Managing Partner of Wela.
What makes Wela different than the other strategists in the marketplace today?
Income, Income, Income. We have been focusing on income strategies at our firm since before it was sexy. The firm we were born out of has $1B AUM for individuals and we have been running an income-focused strategy for the last 15+ years. Leveraging this experience, Wela’s flagship strategy, the Agg Yield, is unlike any strategy in the Strategist landscape today. By strategically managing a number of asset classes such as closed end funds, MLPs, REITs, preferred stocks and fixed income ETFs, we create an “Aggregate (Agg) Yield”, aiming to generate a consistent stream of income coming from this diverse portfolio. By focusing so much of our time on unique income strategies that attempt to solve the yield dilemma that faces clients today, we are very different than the majority of the marketplace made up of sector rotation, tactical capital appreciation and macro-growth strategies.
OK, so we know what makes the firm different, but what makes this Agg Yield so different than other fixed income strategies?
Because it’s NOT a fixed income strategy. This is where we are really connecting with advisors around the country: everyone knows what an MLP is and how it works, but does a typical advisor have the time or research team available to understand how MLPs react relative to REITs in a given market cycle? Or how about screening the marketplace of 600+ closed end funds which can be great sources of yield to find the best opportunities? Or better yet, how about knowing when to dial up exposure to closed end funds relative to preferred stocks? These are the questions that we are answering with our Agg Yield strategy giving advisors another tool in their bag aiming to satisfy their clients’ income needs.
Does Wela have any other strategies to complement Agg Yield?
Wela was built on the concept of building total allocation strategies with ETFs. We developed a simple concept to appeal to investors of all levels called Own Your Age (OYA) portfolios with the intention of an investor “owning their age” in income investments. As clients near retirement, their OYA equation would dictate a more conservative and, likely, higher yielding strategy. These strategies are a new twist on “target-date” funds, but actually holding the targeted allocation instead of shifting.
What are your thoughts on Strategic vs. Tactical strategies?
I don’t think there is an either/or debate. Different strokes for different folks. I think strategic is simpler and easier to understand. If an investor is sophisticated enough and wants to understand more complex inputs to a strategy and desires the attempted enhanced upside or downside protection that some tactical managers promote, this might be appropriate.
What is the origin of Wela using ETFs?
We have been using ETFs since the late 90’s at our wealth management firm and appreciated their targeted exposure to asset classes, low-cost and tax-efficiency (relative to mutual funds). When technology evolved to allow us to efficiently manage all ETF strategies across many client accounts and multiple platforms and custodians, it only made sense to deliver our low-cost, research-driven strategies to advisors and therefore their clients as better “mousetraps” for their investment needs.
Where is the future for ETFs?
There is an incredible amount of growth still to be had for ETFs. The fixed income market is ripe for expansion. The same way that we were given the ability to target sectors within the S&P 500 and markets across the globe (emerging and developed), ETFs have the ability to revolutionize investors ability to tap into the fixed income market that was completely relegated to expensive actively managed mutual funds and buying individual securities while paying significant spreads.
PowerShares. Connection, The Invesco PowerShares ETF Monthly Report, Issue 5. May 2013.