Frequently Asked Questions
1. Who is InTrust Advisors (“InTrust” or “IA”)? IA is a investment boutique that helps high net worth and institutional clients realize their financial objectives through a unique Market Adaptive Process (trend following and price momentum based) that attempts to tactically rotates to the most productive asset styles as market conditions change, allowing our clients to potentially realize enhances returns with less portfolio risk.
2. How is InTrust Advisors different from other investment managers? At InTrust, we believe markets change and so should investor portfolios. We make extensive use of trend following over a 40-60% of the portfolio. These technically based trend following systems look to lock onto market trends, whether up or down, and ride them to completion….taking “the meat out of the move.” Additionally with our proprietary price momentum models, IA ranks its universe of holdings daily in an effort to own top-performing investments, while striving to reduce the drag effect of weaker performers by selling them off in a timely way. At market inflection points, InTrust rotates out of certain holdings and into cash or ETF securities that are short or inverse the market.
3. Contrast InTrust’s strategy with other investment strategies. Traditionally, investors tend to gravitate to a single-style or approach (i.e. growth or value) and then allow their portfolio to become static in this one area. Alternatively, an adviser helps them develop a diversified portfolio in which their weak investments may offset their better performers. This diversified portfolio remains fully or near fully invested in both up and down markets. The latter markets can be devastating to a portfolio that has fewer than 10 years until utilization. By contrast, IA utilizes a diversified strategy that systematically reallocates portfolios to take advantage of what our models indicate are the prevailing investment performers. The strategy also tactically rotates out of positions during market dislocations to protect principal and, as market trends develop, profit from declining markets.
4. How do you compare with other money managers like SEI or Russell? Multi-manager programs do a great job of diversifying portfolios by combining multiple approaches and asset classes. This has proven to smooth out returns and reduce risk. IA adopts a similar portfolio structure with one primary, important difference; by striving to be in stock groups which are in favor, IA works to reduce any “drag effect” lower performers may have on a portfolio. Traditional multi-manager programs tend to “neutralize” style, sector and country positions by maintaining static allocations across all the various styles. For example, a “neutral” position would be to hold 50 percent of a portfolio in growth strategies and 50 percent in value strategies. This type of diversification tends to average out returns as the outperforming style is generally offset by the underperforming style. IA, on the other hand, seeks to adapt toward the best performing styles while still maintaining diversification across styles, sectors and countries using our multi-strategy approach. The second major difference is that IA is not purely long, but can be short or inverse in most strategies to a maximum of 50% net short (inverse). This allows our clients to potential to earn positive returns in a down or bear market.
5. How does IA’s Market Adaptive Process work? Our process works based on a series of financial models or algorithms that detect when and where market shifts are occurring. These models help IA steers away from weakening groups of investments and toward groups that are gaining strength. Our “buy” or “sell” candidates that pass through a technical screen to determine the right buy point. We are value investors at heart and want to purchase a new position at or near a point of value on its chart. That position is then held until there is a break in its upward trend, it hits a stop loss or it hits a target level.
6. In what market groups does IA invest? Our groups can be broken into six broad categories; fixed income, U.S. sector, U.S. style, commodities, currencies and international. Fixed income represents investment in bond pools in such areas as U.S. treasuries, high yield, and TIPS. Sector denotes industries such as technology, energy, consumer cyclicals, and telecommunications. Style labels companies by size (large, small, or mid-cap) and by growth or value measures. International describes funds available in countries and regions outside of the United States such as Asia, Europe, and Latin America. Commodities reflect investments in ETFs that track physical commodity indexes, such as energy, coal, cotton, sugar or metals. Currencies reflect investments in foreign currency index ETFs, such as the Yen, Euro, Krona or Peso. IA allocates portfolios across all six segments, buying and selling within them as trends dictate.
7. What is market rotation and why is it important? Rotation is when a market group such as biotech, Latin America, or large growth, moves in or out of favor. These cycles may last from a month to several years and are driven by economic factors, political, and geopolitical events. Because of rotation, we believe frequent portfolio updates are vital to producing and protecting wealth – more vital than owning any one “hot” stock or manager.
8. I’ve heard of rotational investing. How is IA unique? First, InTrust Advisors focuses on performance consistency. IA’s approach gives the potential to perform well in an “up market” and the ability to rotate to areas of safety or profit during prolonged market dislocations. Secondly, Our process is based on algorithms or financial models that have been developed and tested over a number of years. Third, IA portfolios maintain holdings in all major U.S. styles, sectors, fixed income, commodities, currencies and international markets. Other firms working to capitalize on market rotations typically focus on one area of investing such as U.S. sector, leaving other important investment opportunities (international and/or style) on the table. Finally, we closely monitor portfolio risk in both new positions and in the portfolio as a whole. This means we are ready to sell and move to cash as positions hit their stop loss, cross their trend line or hit a target price. Protecting your capital is job one for us.
9. Does IA try to “time” the market? Yes and no. The classic definition of “market timing” is moving out of stocks into another major asset like bonds, real estate or cash. IA stays fully committed to the positions in its portfolios as long as they maintain their high relative ranking, stay on trend and above their trailing stop losses. The fact of the matter is that even during a mild correction, we have some positions that are sold into the correction because they follow below trend or hit a stop loss. We then wait for market conditions to stabilize and technical indicators to confirm that it’s safe to establish new positions. While we wait, your money is sitting in cash – a great place to be when the occasional correction turns into a full fledged Bear Market.
10. Are IA portfolios diversified? Yes. Through the use of ETFs, the underlying individual stock holdings in any IA portfolio number in the hundreds. Additionally, these holdings are focused in the groups we believe are leading the market at any given time. IA strives to reduce the drag effect of low performers by selling them off in a timely manner. The result is a more productive form of diversification that focuses on the best groups within fixed income, styles, sectors, and regions.
11. Does IA have a sell discipline? Yes. IA knows that part of making money is not losing money. That is why we rank and re-rank hundreds of securities each month. We then select those positions our models indicate should be the top performers to include in our portfolios. In the event that holdings in a particular segment weaken beyond a predetermined level, IA will sell those investments and move into cash or other highly ranked positions.
12. Will IA go short in my portfolio? Yes. The idea of shorting scares many investors. However, with the advent of ETFs that you buy like a stock and they track the inverse of a market index – this process is really quite simple. Additionally, it gives the investor an opportunity to profit from both rising and falling markets. This is a key point of differentiation for IA.
13. Are IA’s portfolios tax efficient? IA portfolios are not focused on tax efficiency. Taking taxes into consideration is important. However, we believe the tax decision should not override the investment decision.
14. Does InTrust Advisors have its own funds? No. IA does not offer proprietary mutual funds or ETFs. Instead, we utilize universally available exchange-traded funds (ETFs) in a series of model portfolios that are available as separately managed accounts.
15. How does IA get paid? InTrust Advisors is a fee-based money management firm. Our fees are detailed in IA’s disclosure statement that can be accessed by contacting us at 813-253-2388.
16. How are IA’s services available? IA’s services are available directly or through a growing network of participating broker/dealers, independent financial advisers, and CPA firms across the country.