Our Portfolio

Higher Risk = Higher Reward

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.

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.

Better Diversification

1

Asset Class Analysis

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.

2

Portfolio Construction

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.

3

Tailored Risk

After creating a stable master portfolio, we tailor your individual portfolio according to your:
  • Timeline to achieve specific goals
  • Appetite for risk

We use leverage to match your goals to your preferred level of risk.

Lower Fees

We only use extremely low fee ETFs to achieve powerful diversification in our portfolio. You will find that the average ETF fee to be about 0.31%, which on $10,000 approximates to $31 a year. Compare our low fees to industry standard funds, which average 1.25%.

Factor ETF Ticker ETF Name Expense Ratio

Commodities

This 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 Rates

Inflation-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 0.07%
LTPZ PIMCO 15+ Year US TIPS Index ETF 0.20%
WIP SPDR DB Intl Govt Infl-Protected Bond 0.50%

Break-Even Inflation

This 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 0.07%
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 0.15%
EDV Vanguard Extended Duration Treasury ETF 0.10%

Emerging Markets Credit

This 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 0.34%
IEF iShares 7-10 Year Treasury Bond ETF 0.15%
PST ProShares Ultrashort 7-10 Year Treasury 0.95%

Corporate Credit

This 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 Equities

Developed 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 0.07%
DBEF Deutsche X-trackers MSCI EAFE Hedged Equity ETF 0.35%

Emerging Markets Equities

Emerging 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 0.14%

Natural Resources Equities

Natural 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 Equities

Companies 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 0.79%

Real Estate Investment Trusts

Real 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 0.18%

Global Diversification

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.

Learn more about our approach: Risk Parity

1

A Modern Approach to the
Traditional 60/40 Asset
Allocation Model
"Discover the new 60/40" ~Oppenheimer Funds

2

Introduction to Risk Parity
"The Risk Parity approach
to Asset Allocation"
~Callan Investments
Institute Research

3

Overview of Risk Parity
"Understanding Risk
Parity"
~AQR Capital Management

4

Risk Factors as opposed to
Asset Classes
"Risk Factors as
Building Blocks for Portfolio
Diversification"

~Callan Investments
Institute Research

5

Introducing Factor Risk Parity
"Diversification - Still the
only free lunch?"

~JP Morgan Asset
Management

6

The two main drivers of Asset
Classes Returns: Growth and
Inflation
"Regime Based Asset
Allocation Seeks Higher
Returns, Lower Drawdowns"

~BNY Mellon Asset
Management

Reset Password

Enter the email address associated with your account, and we'll email you a link to reset your password.


Cancel