Welcome to the What's Hot at Orion Portfolio Solution monthly webinar on performance flows and positioning. I'm Rusty Vadam, the Chief Investment Officer. With me is Ben Vasky, investment strategist and this is the What's Hot for May of 2023. Again, this presentation is a tool to help you build portfolios. There are a lot of pages in this presentation deck. We're not going to go through every data point we're not going to. Through every slide, we want to make sure you have an understanding of how to use this to understand what is hot, Again, to help you build portfolios. Here's the contact information that you want to reach out at. You can reach me or Ben or you can reach the entire team at OPS Research, the e-mail in the upper right corner. We can help you with a lot of different things, not only portfolio construction, but we can also help you with strategy selection and much, much more. As for the agenda today, it's our typical agenda is we'll kind of talk about the slides we have on performance inflows. Positioning some new platform announcements and of course a quick review of our various resources. The next page is the market review. And again, I'm not going to go through all of this, but this is a very useful page to review in advance because the relative performance differences of these between these different asset classes will explain the performance we will show on the performance leaderboard in a few more pages. The next couple of pages I want to highlight really sort of the entire. It's our strategy matrix analysis where we break everything out according to two different ways. We break out strategies on the verticals. We look at our three mandate approach. Again these are beta strategies. Again we break that down to two subgroups which include pure market exposure and also portfolio tilts. The 2nd mandate is active. So traditional active generally adds value through bottom up security selection. There are tactical managers which are top down. Only bigger changes in asset allocational scores allocations. The third mandate is diversifiers and again this breaks out into alternatives and fixed income. Again diversifiers are those strategies that can diversify equity oriented strategies or mandates that as the ones listed above, we also break everything out by firm size. And so again the largest firms are those over 100 billion in assets emerging as everything below 2 billion in assets and boutique is everything in the middle. The next two pages refer to all of the SMA's we have on the platform. Again, we have a lot of estimates on the platform, some of the highest quality managers in the industry. I just want to note that this page, these two pages will have a nice shinier look coming up in the next two months, next month I should say. As for platform performance, the next page we're going to show here is really sort of a summary page. I'll spend a little bit of time on this and then set the stage for the following pages. So the very top line is the overall platform performance. We look at an asset weighted basis. We take all the assets and we boil them down. The average equity exposure on Orion portfolio solutions right now is 57% equities. That breaks out to an average risk score of a 65. That means it's taking 65% of the risk. Of the global equity market and we define it as 60% US and 40% non-us stocks and then you can see the various returns for all those time frames going from left to right. As for other categorizations, of course we bring out all strategies and risk benchmarks. Strategies that are classified as aggressive growth are strategies that have risk scores of 80 and above and they can be above 100 because of course some strategies are riskier than the overall global market. Then everything is a 20 point increment. So growth is 60 to 80 growth and income is 40 to 60 income. The growth is 20 to 40 risk scores and conservative income is anything below 20 and in theory something could even be below 0 if has a strong negative correlation. Next we have the mandates and what I do want to highlight here is just kind of a very rough rule of of frame of reference. And again a lot of people just you build portfolios a little bit differently, there's a very rough rule. Thumb is that a lot of portfolios are built basically splitting the equity exposure between beta and active and then bringing enough to respire in to get to the appropriate risk level. As for firm size, another rough rule of thumb is a lot of people like to build portfolios putting half and brand names and half and boutique and emerging managers. Again those are very rough rule of thumbs and we kind of see that quite a bit. And the following pages we break out performance and this, these, this first 2 pages is looking at all the strategies irrespective of strategy type, wrist benchmark, mandate, firm size. And so we can see for instance, we have in the one month column in the upper left hand corner that Logan International Dividend had the top performance of all the strategies about the 600 strategies on our platform. Last month we break out this page between one month year to date, one year and three-year. And on the next page we also show the five year performance and then the 10. Their performance and the pages that follow, we break out by all the different categorizations. So the next 5 pages are all about risk levels. So we look at aggressive growth. We look at growth. We look at growth and income. We look at income and growth and finally, conservative income. Then we look at all the strategies and break it out by mandate. So we look at beta, we look at active. And then we also look at diversifier. Then we also break out by firm size, so brand, boutique and emerging. Then we break it out by the type of strategies. So first we look at all the mutual fund strategies that break out the performance and then we look at ETF strategies and then we look at stock strategies. The next two pages are really going to talk about the easy button. So again this webinar is really about kind of giving you some frame of references of how to build portfolios. But if you want to go even easier, there is an easy button and that is simply select the M chem or the market cycle advise mandates. Again, we built five different portfolios, all based off of various risk benchmarks and the next page will show that performance has been quite solid since we launched these strategies a little bit over three years ago. So that's kind of my quick and dirty. Now let's get to Ben and talk about inflows. Thank you, Rusty. So talking about inflows, we're going to have a very similar structure to how we just talked about performance. We're just talking about what came into the platform, what was purchased, where are the dollars going. So very similar chart here to start off with. We've got the whole platform. You can see those similar statistics in those first few columns. So the percent a UM in each bucket, the percent of strategies, the average equity and then we get into the the flow specific information, so you can see the average. Large risk score there on the top level for the for the month was a 60. Compare that to the 64 average for the total AUM. We basically say inflows for this month. We're slightly more conservative than the average assets on the platform. You can do that same thing with the rest of the the. The chart here so we can look at the risk benchmarks, see what percent of the inflows we're going to each different risk benchmark. So compared to a UM, you can see those conservative buckets were fairly similar to their their A UM. And and honestly for April a lot of this shook out very similar to how the A UM looks. So no, no big surprises there. We do break this out by mandate. So like Rusty said, we typically see that split between half and beta, half inactive and then just enough in diversifier. To balance out the risk and we see that consistently over most of those time frames there. And then same with firm size, kind of that same put half in brand and then split out the boutique and emerging. For flows, we do split this out a little bit further than we do on performance. So we look at model type ESG tax aware and mandate or or asset class, my apologies. So you can go a little bit deeper to see where flows are going compared to the A UM. So for example one big trend is that stock models, those SMA models have. Gathered a lot of traction lately. So while they only have 8% of the A UM, they had 13% of the flows last year so or or last month. So you may pay more attention to those stock models that are getting a little bit more more attention than than the mutual fund and ETF's. Another great resource would be to look at this, this bottom section with the asset classes. Generally we see most of that a UM falling in the multi asset. Buckets. So those strategies that pull in equities, bonds, alternatives altogether, but we have seen more attention to come to some of these other asset classes as volatility in the markets has shaken up and some of the trends that we've seen over the last five or ten years have begun to change over the last year or so. So on the pages that follow, again we have all of these top ten charts for your use. So again this is just inflows for the platform. So we can look at one month, three month year to date and one year inflows basically for any way you want to slice it up. So here we have the total platform just blank slate who had the most flows over these time periods for the all 600 strategies and then we do break them out by all those characteristics that that Rusty mentioned for performance, so. We have all the risk benchmarks that's progressive growth, growth, growth and income, income and growth and conservative income. We have those market cycle mandates with the beta strategies, active strategies and diversifiers. We have brand or firm size, so brand firms boutique. And emerging And then finally by model type. So mutual fund strategies, ETF strategies and stock strategies. Taking a bit of a broader view at the a UM on the platform, we can look at the aggregate positioning. So just like the flows and the performance, we do asset weight all of this. So we'll take Morningstar statistics, we'll asset weight those across the whole platform and then we just put them in these nice little charts so that you can kind of see how the average a UM on the platform compares to the average a UM of a couple of different benchmarks. So the way to use these charts that blue bar is going to be the the average for. Yes, the dark black bar is a global benchmark, so 60% domestic, 40% global equities and that Gray bar is a domestic 100% equity benchmark. So on that first far left bar for example, you can say we have between generally 50 and 60% equity for the average dollar on OPS and compare that to to benchmarks that are 100% equity. So it's just a way to kind of get A-frame of reference when you're comparing to benchmarks that you know OPS isn't necessarily just representative of those benchmarks You may see on TV, we do have these also for fixed income, we have averagedration and credit quality, so. Just as a broad kind of statement here, we generally have lower duration and lower credit quality on OPS than you may see in those Bloomberg aggregate benchmarks. We do also pull in some trailing and expected returns from the asset allocation interactive tool from Research Affiliates. There is a link there in the bottom left corner of each of these slides if you want to go play around with this tool. It's free to use. You can change a bunch of the different characteristics that you want to look at, all the asset classes you want to look at. It's a great way to just kind of see where we've been and where we might be going. So no surprises again on this. Nominal 10 year trailing returns US large caps dominating on on a risk adjusted basis up there in that far right hand corner. And then if we look at expected you can see how much that's changed from the last 10 years to the the upcoming 10 years. So just as I mentioned large cap used to be in that top right corner now much, much lower on the expected nominal returns down there towards the bottom with commodities whereas EM equity and small caps are up in that top right corner where you kind of want to be. Living on this chart and with that I'll pass it back to Rusty for an overview of the resources. Thanks Ben. Well, the next page we're gonna talk about new platform edition. So we do have a couple new strategies coming onto the platform. First of all, we have the large cap value SMA from Confluence. And then we also have the Engine #1 Transform 500 ETF strategy, which we do also have a podcast interview coming on on shortly. In terms of our resources, we do crank out a lot of stuff here. So again, we have the webinar such as What's Hot. We also have our portfolio recipes. We do podcasts which I just referred to such as the Weekly, the Weighing Machine and also the monthly Weighing the Risk. Quarterly reference guide, a monthly chart book called Starting Points Matter. Looking at relative valuations going back to the beginning of century. We have commentary including on Monday Morning Bullets, also Monthly commentary and the OPS Cookbook. Just diving a little bit deeper, of course we just talked about this, what's hot, we're experiencing it right now. Now Portfolio Recipe webinar. Every month. We do have a concept. We build a portfolio around this month is the defense and offense portfolio coming with Janice Henderson and with the Spotlight a lot. These portfolio recipes feed into our OPS portfolio recipes cookbook. Check that out. As for our podcast, again we do have the weekly The Weighing Machine. This is an updated listing of our most recent podcast. We also have our monthly The Weighing the Risk which has been a big hit in terms of number of listeners as well. We actually have one being also published next shortly. Well, every single month. That's right. This is not a live recording. We are recording this as well. So the next is the OPS resources, the quarterly reference guide again. Has been this is not talking about market conditions, this is really talking about more counseling tools that can support discussions why to stay invested, stay diversified state discipline. Last time we do have the chart book and just to kind of highlight how this works. I'm just going to go through one of these charts and just how to read it. Again, this is a relative valuation metric going back to the beginning of the century. We'll look at four different valuation metrics. We simply take an equal weight average of those four and we just compare in this case U.S. stocks versus non-us stocks and. Over that time frame the yellow line represents the average. So the US stocks are traded on average of a 3033% premium to non-us stocks. That Gray line surrounding is 1 standard deviation away, so one standard deviation is 153. So if it's more than 53% that considers U.S. stocks expensive, which they are now and as they are at a 63% premium. Next couple of pages we just show small caps. We also show show value stocks as well. This is an example of domestic as opposed to global. Lastly, again, contact information, we've showed it to you before, but again, please reach out if you have any questions on the content for this webinar or anything else or just help building strategies and building portfolios. So thank you for your time and trust and we will see you next month. _1696232970566

Data ending April 30, 2023.

Join Orion’s Chief Investment Officer, Rusty Vanneman, CFA, CMT, and Ben Vaske, Manager, Investment Research Analysts, for this month’s illustration of performance, flows, and positioning on the Orion Portfolio Solutions platform.

During the presentation, Rusty and Ben will look at what happened in the market, highlight the strategist firms and models that performed best, and dive into total average performance by mandate type and strategist classification. They’ll also explore the overall strategist lineup on the Orion Portfolio Solutions platform, including recent additions.

For financial professional use only. Not intended for public distribution.