Sterling’s Eicker: Overweight Bull Assets

November 13, 2013

IU: Which two asset classes are you overweighted to at the moment?

Eicker: International equities and U.S. equities.

IU: What are the market scenarios that this portfolio could potentially struggle within?

Eicker: The market cycle we’re in right now, a U.S.-equity-led bull market, is our most difficult market environment. We’re very proud to have received five stars from Morningstar in this environment since, by definition, we can only have an overweight to two asset classes at any given point in time. So my belief is that this is our most difficult period of time.

IU: What does your firm have under its belt at the moment, in terms of AUM?

Eicker: At the end of the quarter, we were at $205 million. That’s both AUM and AUA.

IU: How much of that is allocated to your flagship portfolio?

Eicker: Passive rotation is up to $105 million.

IU: Are any of your other portfolios fostering the same attention as the tactical allocation? Or is that your “big dog”?

Eicker: That’s our big dog, but only because of the period of time we have been live. We’ve got almost a four-year GIPS [Global Investment Performance Standards] track record on the tactical allocation strategy, while the other strategies have less time.

IU: Which portfolio would you say is your next “big dog”?

Eicker: I'm really excited about our alternative bond strategy, because it’s the same algorithm as the tactical portfolio. In the alternative bond strategy, we’ve got low-correlated bond ETFs that we rotate between, and we also have a seventh asset class, the inverse 20-year Treasury.

I feel like this is a portfolio that in a typical bond bear market could perform as well.

IU: How old is that portfolio?

Eicker: We went live on that around June 2012.

IU: Is there a rule of thumb when it comes to life span of a portfolio before it can get your blessing?

Eicker: Yes. Almost everything that comes through, in terms of new AUA/AUM, is advisor driven. Most advisors are looking at three-year numbers. In about another year and a half, we’ll be able to focus a little bit more attention on the alternative bond portfolio.


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