Better Returns at the Same Risk
Appian Road has consistently outperformed both traditional wealth managers and the U.S. Market benchmarks over the past 11+ years at the same levels of risk.
The Appian Road portfolio uses leverage to maintain the benefits of diversification at all levels of risk. For instance, returns will grow proportionally as a client chooses a riskier portfolio. This contrasts the poorly diversified traditional 60/40 asset allocation model in which more risk does not necessarily translate into higher returns.
Appian Road has consistently outperformed both traditional wealth managers and the U.S. Market benchmarks over the past 11+ years at the same levels of risk.
An asset’s performance is driven by two major forces –
growth and inflation.
As can be seen here, stocks do better in an environment
of rising growth and falling inflation, while bonds excel
under falling growth and falling inflation.
We take into account how each asset performs in different economic climates to create four sub-portfolios.
Sub-portfolios combine, each forming 25% of one holistic portfolio that performs well in all economic environments.
We use leverage to match your goals to your preferred level of risk.
Our management fee is 0.75% of assets under management.
And we only use low fee ETFs to achieve powerful diversification in our portfolio. You will find that the average ETF fee to be about 0.30%, which on $10,000 approximates to $30 a year. Compare our low fees to industry standard funds, which average 1.25%.
Factor | ETF Ticker | ETF Name | Expense Ratio |
---|---|---|---|
CommoditiesThis includes a balanced mix of all types of commodities. Generally a great hedge against rising inflation and performs well during periods of high and steady growth. Commodities
|
GCC | WisdomTree Continuous Commodity Index Fund | 0.75% |
Real RatesInflation-linked Bonds are the key asset class in this category. Their success is inversely related to Real Rates, interest rates received from an investment after removing credit and inflation risk. Real rates generally represent the “pure” cost of money, and can therefore be considered a measurement of a company’s ease in taking on debt. Real Rates tend to rise in the setting of high growth and demand for credit/cash. The inverse relationship between Inflation-linked Bonds and Real Rates means that this category performs best under falling growth. Real Rates
|
SCHP | Schwab U.S. TIPS ETF | 0.05% |
LTPZ | PIMCO 15+ Year US TIPS Index ETF | 0.20% | |
WIP | SPDR DB Intl Govt Infl-Protected Bond | 0.50% | |
Break-Even InflationThis rate compensates investors for the expected inflation risk of bonds. This factor inevitably will perform better when inflation comes in below expectation. Break-Even Inflation
|
SCHP | Schwab U.S. TIPS ETF | 0.05% |
LTPZ | PIMCO 15+ Year US TIPS Index ETF | 0.20% | |
WIP | SPDR DB Intl Govt Infl-Protected Bond | 0.50% | |
TLT | iShares 20+ Year Treasury Bond ETF | 0.15% | |
IEF | iShares 7-10 Year Treasury Bond ETF | 0.15% | |
BNDX | Vanguard Total International Bond ETF | 0.09% | |
EDV | Vanguard Extended Duration Treasury ETF | 0.07% | |
Emerging Markets CreditThis is the spread (interest rate) earned by investors for taking on credit risk on an Emerging Market Bond. Under rising growth and/or inflation, demand for exports will usually increase, providing more cash inflows for emerging market governments and reducing the expected probability of default. The resulting rally in emerging market bond prices ultimately improves Emerging Market Credit spreads and associated returns. Emerging Markets Credit
|
VWOB | Vanguard Emerging Markets Govt Bond ETF | 0.30% |
IEF | iShares 7-10 Year Treasury Bond ETF | 0.15% | |
PST | ProShares Ultrashort 7-10 Year Treasury | 0.95% | |
Corporate CreditThis factor isolates credit spreads for lower-rated companies. This return stream outperforms when the growth of these companies exceeds expectations, improving their ability to repay their debt, resulting in a lower probability of default and a higher return on your investment. Corporate Credit
|
HYHG | ProShares High Yield—Interest Rate Hedged | 0.50% |
Developed World EquitiesDeveloped World Equities will generally will perform well in high growth periods driven by the equities and falling inflation. When inflation falls, there is a lower cost to borrowing and higher present value of expected future dividends. Developed World Equities
|
SCHA | Schwab US Small-Cap ETF | 0.04% |
DBEF | Deutsche X-trackers MSCI EAFE Hedged Equity ETF | 0.35% | |
Emerging Markets EquitiesEmerging markets are strongly linked to the global economy. Thus, similarly to Developed World Equities, they outperform in a strong growth environment. Emerging Markets Equities
|
SCHE | Schwab Emerging Markets Equity ETF | 0.13% |
Natural Resources EquitiesNatural resources are highly correlated to inflation expectations, given the fact that their main output products are commodities. Logically, they therefore tend to outperform in environments of rising inflation Natural Resources Equities
|
GUNR | FlexShares Glob Upstr Natural Resources Idx Fund | 0.46% |
Frontier Markets EquitiesCompanies in frontier markets are the main producers of commodities and tend to outperform in environments of long-term rising inflation. Why? These companies tend to hedge out their natural resources liabilities such that short-term spikes and dips in commodity prices do not strongly affect their profits. Frontier Markets Equities
|
FM | iShares MSCI Frontier 100 ETF | 0.81% |
Real Estate Investment TrustsReal Estate Investment Trusts (REITs) are a type of equity, as they represent companies that invest in real estate. REITs capture the risk premium mainly associated with the appreciation and rental income of commercial and residential properties. This factor is important to your portfolio as it improves overall diversification. Real Estate Investment Trusts
|
SCHH | Schwab U.S. REIT ETF | 0.07% |
VNQI | Vanguard Global ex-US Real Estate ETF | 0.12% |
We believe in spreading risk across both asset classes and geographical exposure. Unlike other traditional wealth managers or roboadvisors, the global diversification of our portfolio remains intact at all levels of risk - improving the overall bottom line of the portfolio.
A Modern Approach to the
Traditional 60/40 Asset
Allocation Model
"Discover the new 60/40"
~Oppenheimer Funds
Introduction to Risk Parity
"The Risk Parity approach
to Asset Allocation"
~Callan Investments
Institute Research
Overview of Risk Parity
"Understanding Risk
Parity"
~AQR Capital Management
Risk Factors as opposed to
Asset Classes
"Risk Factors as
Building Blocks for Portfolio
Diversification"
~Callan Investments
Institute Research
Introducing Factor Risk Parity
"Diversification - Still the
only free lunch?"
~JP Morgan Asset
Management
The two main drivers of Asset
Classes Returns: Growth and
Inflation
"Regime Based Asset
Allocation Seeks Higher
Returns, Lower Drawdowns"
~BNY Mellon Asset
Management
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