Good afternoon and welcome to the November OPS Portfolio Recipe Webinar. My name is Ben Vasky, Senior Investment Strategist at Orion and thanks for being here this afternoon. So this month we are talking about the navigating uncertainty portfolio and before we get into some of those details, there are a few quick notes. So First off, these webinars along with all the content that we're creating here at Orion is to help you, the advisor think about the markets and build portfolios with our our platform. So First off, we do have this investment strategy team to support both our Orion and Breaker clients. You can see all of our individual contact information here as well as a few different team emails. On that top right corner along with the right side are just some examples of some of the stuff that our team can really help you out with on top of all the content that we're pushing out to you. And then a few other housekeeping notes for the webinar itself. If you look on the bottom left hand corner, there are plenty of resources including today's webinar slides as well as some collateral from our guest today. And then on the bottom middle section, there's a little Q&A box. We will be doing about 20 minutes of Q&A at the end of this webinar. We've got a couple of great guests. So bring on some awesome questions and we'll we'll look forward to seeing those. As for the the webinar and the theme this month, so we are tackling the navigating uncertainty portfolio. So we we really believe that actively managed strategies can help investors navigate markets that are currently frankly shrouded by uncertainty. There's always a level of uncertainty that should be expected in in investing in the markets. But with the the movements and the treasury yields lately with very volatile markets, lots of seasonality trends going on this year, it really takes a a high level of active management to be able to help you navigate these uncertain times. So as this says, lots of economic headwinds. There's still recession fears that are top of mind for a lot of investors. These strategies really can be a prudent factor, making sure you're building portfolios that are really resilient in these uncertain times. So let's introduce our speakers. We've got a couple of great speakers today. We have Kim Arthur, President and CEO of Main Management. And then we have Fritz Fultz, the Managing Partner and Chief Investment Strategist AT3 Edge there. He's going to do their own slides and then we have an extra section this month compared to prior months where we're going to really talk about how these two strategists can work together to build that resilient portfolio. So I'm really excited for that section. And with that, I'm going to bring him in for his section and welcome Kim. Ben, thank you very much. First of all, I wanted to, you know, thank you and your firm for the incredible partnership that we've had for a decade plus. And I really appreciate that and appreciate all the clients and advisors spending some time to listen to us. Also I want to say thank you to Fritz. Fritz and I have known each other for probably 15 years. So we go, we go back a long way too. So I'm really excited to do this. I want to talk today a little bit about a couple strategies that we have that Ben, you mentioned that are actively managed strategies. It's going to be the active sector rotation and the buy, right. I always like to kind of start off with the why we're in business. The why is because we believe that clients and advisors should keep more of their after tax and after fee return. So that's kind of an overarching piece that we like to look at. Couple 20s here. We've been, you know, been in business building ETF base portfolios for more than 20 years. We've got 20 people on our team. I think I'm really proud and biased, obviously, of the team that we've built here and I do know that products can be fungible, but good teams are not and I think ours are really, really good. We also have a key piece here is that 15% of our firm's money are partners money. So we're invested right alongside the clients and it is I think a a very, it's a mandatory requirement. If I'm on the other side of the the table, that would be one of my demanding check boxes. We've run about $2.7 billion of AUM and AUA, again an active manager of passive industries. We like to say that with us we all have an institutional background. You can see the four investment committee members there. The other thing that is key is that if you look at the body of work, IE your past historical performance, you want to make sure that that is been delivered by the current players on the field. And that is very true with this investment committee. The three of us have been together since inception and then Alex has been with us, our Director of Research. He's been with us for a dozen years and has been on the committee for about 5 plus years. But again, you get an institutional process with a boutique feel, So that means you get immediate and direct access to all the decision makers again. Active manager of passive indices, over 150 years of combined experience. Quick thing on the difference between ETFs and mutual funds, which I think is very, very critical. Similarly structured, but I like to look at ETS, they're version 2.0. They came after mutual funds. They initially kind of led with cost. They still do have very low embedded fees. Mutual funds have had to respond and try to lower their fees. The taxes is key and last year was one of those years 20/22. It was like 2008 where you lost money in the market because the market was down. Now the ETF also lost money, but the mutual funds gave you an awful bonus that was a capital gains distribution and they did that also in 2008. So that is a naughty thing to do. You get intraday liquidity. And you get full transparency. Remember your mutual funds, they're listing their holdings every 90 days where the ETF, it's real time. So you can always know what you have, OK. Our investment process, it's fundamental with a catalyst, OK. And I'll go into that here on the fundamental side, it's the left hand side of this picture. Here we've got factors. So we say they're quantitative. So those factors are price to book, price to sales, price to earnings, cash flow. Different factors impact different sectors of the market. So let me give you 2 quick examples there. With financials, usually the highest correlated factor to future price movements is price to book. Price to book where is if you look at technology and other growth. Price sales and things like peg ratios, price to earnings divided by growth can be much more impactful about future price earnings. So we've got a very robust process looking through those different factors that would be your fundamental analysis. And then by a catalyst, you look on the right hand side of this, there's different pieces, there's different macro micro indicators that we're searching for that will take. That sector that we are looking at and hopefully get it to move back up to its historical range of the higher end of the factor valuation. So it's a very robust process. It's the same process we've used for 20 years and we just continue to refine it and build out our, our, our. Our qualitative side of it, so we're very proud of what we've put together there and it's Rd. tested for 20 plus years. This active sector rotation, again this is if you look at the top portion of that slide, the positioning of it is for portfolio growth, OK. It's portfolio growth is what we're trying to get and achieve with IT main management. Deals with the risk management that's part of what we do on a real time basis. And then you put the two of them together and you're going to get an enhanced diversification strategy that comes out of it. If you look at the wheel on the right hand side, that's kind of a traditional asset allocation with equities, bonds and alternatives. You can see we live with this strategy in the core U.S. equity bucket. When we you know when you look at some of the recipes or some of the mixes later on, you'll see three edge can can slide in there over on the bond side for one of theirs, but Fritz will be talking about that. So if you look at this again, it's AUS large cap blend that fundamental with the catalyst that I just spoke about before, which is very, very key. And then the US market has 11 sectors. So those sectors include technology, healthcare, energy, materials, consumer discretion. Each one of those sectors also has sub industries that are below them. So for instance in technology you could have semiconductors, you can have software and under the healthcare bucket you can have medical devices, you can have biotechnology. So there are the. Predominant high level sectors with which there's 11 and then there's sub industries. This strategy we overweight and underweight. So we're typically anywhere from three to six take the midpoint of that four sectors that we feel are are undervalued or mispriced and that there's catalyst to get them to go back up to the higher end of their ranges. And then within those four sectors, we will build out our exposure with some of the sub industry. So that kind of gets it. This is a time in the market versus timing the market strategy. What do I mean by that? You've probably seen, if you haven't seen, dimensional funds as a study, and other people have done this too, if you look on the past 50 years, from 1970 to the end of 2019. It's pretty amazing there if you miss the single best day on each year for that time frame there. And remember, that's one trading day. That's less than 1/2 of 1% of all the trading days. You missed that one day. Your returns are 10% lower per year, 10% lower. If you expand it to missing the top five days, that's only 2%. 2% of all the trading days there. Now your returns drop 36% from what they would have been being fully invested that entire time. And then it just goes crazy. If you missed the top 15 days, that's 6% of the trading days. It's almost 2/3 lower. So again, it some people can be really good on on picking that timing, but over a long duration it is a difficult act to follow. So we think again it's time in the market this strategy has 2020% opportunist bucket which could be cash fixed income. Typically again on the cash side, 10% would be a big cash for us and it would just be as we're waiting to leg into a new bench position that we have and you get because of the ETF structure, you get a lot of diversification of individual holdings that are under the cover there so. That's kind of gives you how the, the, the, the strategy is positioned in where it lives. This takes a quick look at the end of the third quarter, the active holdings that we have. So you can see the top part of the panel or the overweight ones I mentioned that will overweight underweight, we can go anywhere from a 0 weighting actually have none of it. So you're making a very tactical bet within the sector, not timing the market overall. And then you can have a overweight that can be up to 2 1/2 * 2 1/2 times. And you can see here from the top here that it's you got energy, communication services, industrials, healthcare, then tech just over A1. Waiting on that. I'd love to be able to tell you that any given year, any given year, that we were smart enough that all four of our overweights are at the top of the price charts there. It usually doesn't happen that way. Typically you'll have two of them and you can look at that list. The two that you have there at the top of the charts this year will be communication services and and Infotech. And then you've got two that are somewhere in the bottom 3rd that I like to say they're seasoning. They're trying to kind of like the catalyst hasn't fully kicked in, but hopefully if we bought them right. You you've limited your downside and you're kind of waiting for the fundamentals and for the market to kind of realize what is going on. If you look at the whole bundle together and it's not on the slide there, but the strategy right now is about 15 1/2 times the 412 month PE, the market is at about 18 times. So part of that discount is because there are some. That relative value ones that we do have in including healthcare and energy, if you look at a wider lands there like going back to the end of 2021 now the S&P over that time frame obviously was down hard last year it's up this year it's probably down high single digits. Strategy that we have is, is down about mid single digits. So there's been some generation of alpha against that. But some of those groups, you've got energy that's actually up 50%. So it kind of exploded last year that's had a big time out this year. And that's sort of a pattern that you'll typically see that happens in these things. They don't all happen at once. They move and they get little timeouts that happens. So we're constantly monitoring through those different things. Tax aware investing is where we started. We started our firm. I like to affectionately say we're out here in the People's Republic of California. We have probably the highest state income taxes. We've got taxes everywhere. And so we are very, very tax aware and our strategies we started with all taxable money. But I firmly believe that if you can do a good job in taxable accounts, you can do a very good job in non taxable. So they work both ways. Sometimes it's not as easy to go the other direction to start your career in non taxable, because in that case there you tend to have usually higher turnover because there aren't taxation issues. But with turnover again comes that reinvestment. It also comes slippage. That can happen. So again. On the tax side, ETFs are a great structure to use. They're typically way more tax aware. And one of the big things, if you look on the lower left hand side, it's this ability to redeem certain positions that's called a custom redeem, a custom redeem. And that means that that ETF structure should not deliver that capital gains that I mentioned. That happened last year when all funds were down. You had equities down 1819%. You had fixed income down 15%. So that meant that there were redemptions that were coming out of it. You should not be impacted if somebody else is in a fund structure with you with their actions, and that is why that ETF is a much better configured product than a mutual fund. And then when we look you know again I go back to that why, why are we in business because we believe that clients should keep more of their after fee after tax returns. So that kind of covers, covers that area. All right. I want to talk a little bit about this by right so quickly if I give you kind of AI want to give you a mental image of where it sits in a client portfolio. So I like to say if you think of the wall as investment grade fixed income. The last 10 years that investment grade fixed income has returned about 1% because we had very low rates. Typically investment grade fixed income, if you tell me what the coupon is today, I can tell you what the 410 years is. So if you look at the AG, the coupon on that right now is high fours. That's probably what you'll get for the next 10 years better than the 1% that was delivered for the past 10 years. This by right that I'll go through it it it sits. Sorry, I jumped ahead of myself. And then that's the wall is investment grade fixed income, the wallpaper is equity. So think about risk on equities the last 10 years, if you look at that sector active rotation that I talked about, that's about a 10 1/2% tagger that it's done in between that is where this buy right should live and that past 10 years that's had about a 6%. Bob Gagger, so that sort of is your sequence there one 610 1/2 going forward maybe it's going to look more like you know high fours you still would have six and then maybe with the higher starting point for APE equities will be between 8:00 and 9:00 percent still better than the other two buckets but you'll but it maybe they won't be the 10 plus putting together a portfolio of all three pieces there should be able to deliver you 7 1/2% which is what clients. You can achieve a lot of their goals. So kind of getting that where it sits in a client's portfolio, let me explain what it is. We pay out a 6% yield on this fifty basis points a month. So that can help achieve, as I like to say running clients railroad there, they need money to live on. They need different things there, and again, getting some yield out of it can help position that it's. Built from an asset allocation that are all equities and that's why you don't conflate this with investment grade fixed income. It sits in that middle bucket there because it's built from equities and we use the same structure, the same process that we do to, you know, find out sectors that we like in in the sector rotation. Size analysis that we do. So that's that refined repeatable process that we've been doing for 20 plus years. And then the last stage of it is selling covered calls. You're selling covered calls to give a third stream of potential return, your asset allocation, the dividends off that and then this call premium. The key thing to remember not to get too complex. We don't buy calls. We sell calls and keep this fact in mind here, 75% of call buying expires worthless. That means I want to be selling calls because that means that 75% of the time that premium that I bring in that I get to keep that premium. That's a key, key piece to think about. So if you look here, we like to say in this buy, right, it's a dual active. We've got active asset allocation for that equities. Usually there's seven or so ETFs that'll comprise it. And then you have active on figuring out the duration, the timing of those options typically between 0 and 12 months. And whether they're in, at or out of the money, it's typically anywhere from 4% in the money to at the money to 4% out of the money. And it's driven by our price targets for the forward 12 months. So that is kind of a simple analysis of how it's set up. And again, we think that this is one of the few strategies that actually had a positive return last year and that's one of the things that you'll see in options related strategies. They can typically outperform and down markets and flat markets, big up markets, they are not going to outperform the equities, pure unconstrained equities and that's why you have those three lanes that we talked about that they're complimentary for it. All right. And then finally here just kind of that by right you know the again the potential benefits you can get, you can get a 6% yield coming out of it. It will be a lot more tax aware than ordinary income. If you have straight up fixed income, that's ordinary tax rates and when you have taxable accounts for that. This will be a combination of return of capital, long term capital. And then again given the ETF structure we can actually wash out short term gains with opportunistic tax loss harvesting that happens in there. And then it again it allows clients to stay invested while mitigating downside. Again, a lot of other alternatives will tactically try to go in and out of the market. I go back again to it's that time in the market and then using risk parameters, risk features, risk management that we can do. And as I mentioned there on the right hand side, again don't conflate it with investment grade fixed income, but it can be an alternative for high yield which has credit risk but doesn't have the feature being able to have some downside protection. And then again you look at the piece there that typically cumulatively it's outperformed the S&P and flat years, flat years again in a flat down, it should do better, straight up markets going to do better. Equities are going to have a longer term better risk structure and risk risk reward that comes out of it. So the last thing here I wanted to touch on is just again I mentioned earlier on that products are fungible. I get it. The clients you have a lot of options to look at different products and they are, they are fungible but teams that deliver these solutions deliver the advice, deliver the partnership, they are not fungible. And so along with that we have this white glove service that includes essentially think of it that you if you want to, you can have a seat at the investment committee table. You've got direct access to all parts of our business, operations, research, sales, marketing. So again you are a partner when you come together with main management just like we're partnered up with Orion for a decade plus. So you can see these different tiles here about advisor specific one-on-one advisor client calls research team. The market event situation we put out, I I feel exceptional collateral and we try to make it very simple. I use the old model or motto Kiss, keep it simple, keep it simple, but have it effective. So with that, the final thing you can see, here's the team that I mentioned that delivers that. You get 8 dedicated people that are dedicated to delivering these, these models to the advisors, working with the advisors, that's a map. Those are the people that we have. Daryl and I, my partner, we've known each other since 1999. I hired him right out of college and we work together for beginning of our careers of his career and then he's been back with us. It's a pleasure having him and the rest of the sales team. So and I think Ben with that, lots of disclosures. As there always are. Thank you, Jim. That's a great, great overview. It's certainly giving us all a lot to think about. We're already seeing questions really roll in. So keep those coming. We will try to get to all of them at the end. But after these disclosures, I think we're ready to pass it over to Fritz. Fritz, take it away. Hey, thank you. Thank you very much, Ben. I'm Fritz Foltz, the Managing Partner and Chief Investment Strategist at. Three Edge Asset Management, I also sit on our investment committee very happy to be introducing our firm 3 Edge Asset Management. Want to thank Orion for inviting us to be part of this Rep recipes webinar and you know we're excited to be in collaboration with Maine management. You know and we believe that combining these, you know, very different investment expertise of our two firms. Can provide advisors and their clients with really institutional quality solutions which are easy to implement and they're straightforward to explain to clients. And as Kim mentioned, yes, I did meet, I think we met 15 years ago and I kind of got a chuckle out of the fact that it was at CAFA Institute in San Francisco and the topic was creating portfolios using index ETFs, which seems like old history now. But we have known Kim in Maine for many years and so when we came onto the Orion platform, it only made sense to reach out to Kim and the main about potentially collaborating. The it's been mentioned, you know the name of this webinar, if you will, is Navigating High Levels of Uncertainty and that's a timely topic for us because we just did a recent free Edge we can review video. Where we talked about the current environment and we described it as radical uncertainty. And as Ben said, I mean, we all know the truism that investing, it always comes down to making decisions under conditions of uncertainty. But it does seem as though today the future direction of the economy and the markets seems particularly difficult to predict. And there seems to be a very unusually wide gap between the optimists and the pessimistic scenarios that could play out. And we're somewhat concerned that going forward one of the biggest challenges advisors may have in the months and the years ahead is keeping clients invested in what could be very volatile markets so that they have the best chance to achieve their goals obviously and three edge strategies either stand alone or combined with other strategists. Are designed to protect and grow client hard earned wealth over the long term and we call our strategies as used as tactical diversifiers. So we're seeking to generate consistent long term returns while smoothing market volatility and managing portfolio drawdowns. And as I said, this can work quite well when we combine our strategies with other solutions such as Maine. So let me give you a brief overview of our firm. This is the hard part. It's moving slides. Hold on, I got it. There we go. And I know that Tim talked about the team and we really also feel that one of our greatest strengths is our the quality, the knowledge and experience of our team. We have professionals with extensive backgrounds and experience in the investment management industry. And although we're relatively new to the Orion platform, our core research and investment team, we've worked together for the better part of two decades, beginning back in the early 2000s with our prior firm Windward Investment Management, which is one of the earliest ETF strategist firms and in fact. Along with a few other firms, including main management, we were considered pioneers when it came to creating portfolios through index ETFs, something also that Kim mentioned. That's important, which is the same here at 3 Edge. And that is that our senior management team, we all invest the vast majority of our liquid net worth in the three Edge strategies along with our clients. So we're very much eating our own cooking. All right. Let's take a look now and introduce you to Three Edge and where are we located first? So well, our corporate headquarters is in Naples, FL. We also have offices in Boston, MA and Los Angeles, CA. We manage approximately 1.8 billion in client assets and our strategy is. Literally described as a tactical multi asset investment approach, which simply means we're making changes to our portfolios as our outlook for the global market changes over time. And we also invest across asset classes and across geographies. So we invest in stocks and bonds and real assets, which could include gold and commodities as well as foreign exchange. And we construct our portfolios through index ETF. We use no Wall Street research. All our investment research is driven by our proprietary model of the global capital markets. And as I mentioned earlier, the core of our research and investment team have basically worked together over the past 20 years. So how to think about our strategies as tactical diversifiers which I mentioned. So what we're trying to do is we're seeking attractive risk adjusted returns. Over full market cycles as through both up and down markets and we're really focusing and paying attention to managing and smoothing volatility and managing portfolio drawdowns. Our strategies have a low correlation to traditional stocks and bonds which you would expect. And importantly for today's discussion, our investment solutions also maintain low correlations to other investment strategies, thereby serving to diversify investors overall investable assets. Providing additional risk management and the capacity to be additive to returns and these attributes mean that three edge solutions can add value when combined with other investment strategies. As I said, we've used our proprietary model of the global capital markets for our research process and that this model is the result of over 40 years of studying the global markets and. Our CEO and Chief Investment Officer, Steve Cucchiaro has basically spent the better part of his career studying and seeking to to understand the cause and effect relationships that actually drive the market. And there's three factors that we look at. We're looking at valuations and as we know that's very much a long term indicator that's not going to help you in the next couple, two or three months. But it's foundational and fundamental when you're trying to understand whether market is overvalued and undervalued. Next we look at what we call economic factors. So this is basically market factors and factors that we find in the economy and we spend a lot of time looking at interest rates. We look at short term rates, long term rates, the yield curve. The shape of the yield curve is the shape of the yield curve changing. What is that rate of change? And the reason that we do that is we know that there's a lot of information embedded in interest rates and in the yield curve and it's not derived, it's actual market information. So we count on that a lot and we use those factors in doing our analysis. And those, I would say are more medium term looking at 6 to 12 months. And then of course, you also have to take into consideration the fact that investor behavior can drive markets in the short term. So you just can't. It's not something that you can ignore. You have to be a little cheerful because you don't want to get whipsawed. You have to pay attention to it. And so we look at all three of these factors and and and that's how our model is telling us what asset classes we might want to favor and what asset classes perhaps we might want to have less invested in. So this chart and in the in the table here it's going to really describe. How we operate as a tactical firm. So Simply put, right, we're making adjustments to our strategies as our outlook for the market changes over time. And we're shifting the percentage of assets held in the various categories depending on our outlook. And so if you look at this table, you'll see our two key core strategies. 3 edge conservative is blue, total return is. Maybe it's Aquamarine or or some such, and then you'll see 4 columns. And you'll see that we have equities, real assets, fixed income and short term fixed income tax equivalent. And what we have is very wide asset class ranges, right. So we're tactical in order to be effective and to be able to dial back risk, for example, when it becomes necessary. You'll see in the conservative strategy we'll always have a minimum of 6% in equities and a maximum up to only 30% because it's conservative strategy. And then if you work your way across, we'll always have 4% in real assets, which you guys could include commodities and gold. We'll always have between 10 and 88% in intermediate term fixed income. And we have a wide range that we can put in cash in this portfolio. And so if you drop down the same thing for total return there, it's more of a capital appreciation strategy. So the minimum is going to be higher and the maximum is going to be higher and it works its way across here. But what's also important besides the fact that we're being tactical is we're always being diversified. We have a minimum holding. So even if our model is telling us that equities are not favorable, not attractive at all, we're not going to go to 0. We're going to hold some equities. Same with fixed income. Maybe our. Model is telling us that concerned about intermediate fixed income, but we're still going to hold either 10% of the portfolio because your model is not always going to be right. Things happen And so for diversification and risk management purposes, we're always going to hold a minimum as well as a maximum. So it's tactical. But it's also globally diversified. If you look below the table, what you see is the definitions if you will of the two core strategies are three edged conservative which really functions mostly as a replacement for core bonds and that's what people use it for. We're targeting higher return and lower risk than the Bloomberg Bond index with that strategy. And then the three edge total return strategy is more of a defensive capital appreciation strategy and an excellent complement to a 6040 portfolio. This next slide is what we call our seasons of the market chart and it's really good way that we have found to explain to clients how markets go through cycles, right and that you can think about those cycles somewhat similar to. Seasons of nature. You have summer or fall, winter, spring the same way in the markets you have these cycles. So if you start at the bottom of this chart, we can start when the with the outbreak of the pandemic in 2020 and you had a very sharp it didn't last very long to be had a shark economic downturn. We went into a recession and your bonds do well because you have. The Fed coming in and cutting interest rates, but you also had fiscal stimulus. You have monetary stimulus. So what happens is that starts to work. It works its way into assets and into the economy, and you start to move up into the spring. You get economic growth and then your equities start to do better and they do well for a period of time. And that was also the case coming out of the pandemic. And then what happens, as we've experienced, is things start to overheat. And you start to be enter into an inflationary environment and you move up to the top and you get to monetary inflation. We and that would equate to the summer season. And at that period of time it's your real assets, commodities and gold for example that are going to do well. And then what happens is it's not necessarily the inflation that gets you, it's the central banks responding to it. They start to tighten monetary policy, They extract. The liquidity from the financial system and you ship down here into the fall and you get a credit contraction and that's a tough environment to be in because your stocks aren't going to help you much, your bonds aren't going to help you and your real assets really aren't going to help you. But it's your cash and cash equivalents that are going to be necessary. So what we're saying is there are different times where you want to be overweight or underweight different types of asset classes. And so from a foundational standpoint, that's what we're looking to do. We're not predicting which way the market's going to go, but what we are doing is aligning ourselves with where our experience and our model has helped direct us in terms of the future direction of the economy in the markets. So let's just briefly touch on again, there are two core strategies. We have 3 edge conservative and that is a compliment. Or replacement if you will, for core bonds. It's focused on preserving capital. It's for managing volatility and it's appropriate for investors who are risk averse. Maybe they are risk averse, but they're concerned about investing in longer duration bonds. Maybe they're relying on the portfolio for current income or investing with a shorter time frame. So that's our conservative strategy. I got to go ahead and then back. Then we have our total return strategy, which again is a good complement to a more traditional 6040 portfolio. Sometimes the way I described this, it's a little simple, but if you have a 6040 portfolio of 60% stocks, 40% bond, if you take 10 from your 60 in stocks and 10 from your 40 in bonds, now you have a fifty 3020 portfolio and that 20% could be our total return strategy. What you've done is add the layer of risk management. And you've been able to smooth the volatility and manage risk for the overall investable assets. But also importantly, it can be additive to returns because that portfolio is going to hold things that traditionally people don't such as gold or commodities or foreign currencies. So quick summary, what are we doing here at we're trying to achieve here at 3 Edge Asset Management. We're have, we're putting to work a tactical approach. That also includes broad asset diversification above and beyond stocks and bonds. And really what we're delivering in some respects, I think about it, it's really a Peace of Mind strategy for clients because of that risk management focus. And the way we look at that is sometimes you can win by losing less or not losing and that's some somewhat the way we look at this broadly diversified, which I expressed flexible. Certainly it's a tactical approach and we can dial back risk when that makes sense. In order to preserve our client capital, you're adding layers of diversification and adding layers of risk management. Let's say you have and we're going to get into this, you combine the strategy with other strategists. What you're doing is you're adding a layer of risk management there. But also as I said, it's potentially additive to returns because we're going to tend to hold certain asset classes that traditionally you're not going to find. Here is my oversimplified way of thinking about how our strategies could fit the left hand side. We have the 6040 and then as I said you take 10 from your stocks, 10 from your bonds, you end up at 503020 and that 20 could be our total return strategy or as you're going to see as we move ahead our conservative strategy. And lastly we spend a lot of time and effort thinking about client communication and the advisors that we work with and and their clients. I think and Kim touched on this and I totally agree with him, It's very, very important to keep clients informed and to educate clients because that gives them the capacity to not make really bad decisions at at really bad times. And you know we're, I'm not making fun of clients. That's really hard to do right. It's this is such an emotional thing investing that we feel like if we can keep clients understanding where we might be in the market, what might be coming, what we're doing at 3 edge etcetera. And so the way this started is kind of funny. During the pandemic, someone came in my office and said I think our clients are nervous we should make a video. We'd never made a video before, so we went in the conference room with an iPhone and we made a video and sent it out and the results were just off the charts. Crazy people said this is great, please do these all the time. It's so helpful. So anyway, that was the beginning. And now every week we do a video. It's called the Three Edge Week in Review features myself and our Chief Investment Officer, Steve Kukiar. We've got a lot of praise from that. One other thing that we do in terms of communication that I'll mention is we do since we're tactical and since we're making changes, clients are aware of that. They want to know what we did and why we did it. So on the same day that we make a change to our portfolio, we send out something called a portfolio adjustment memo. And this memo says we sold this, we bought this and This is why we did it. And in some respects, I mean we're discretionary managers. We don't have to do that. But we've gotten such positive response from advisors and their clients to say, oh, thank you, it's very helpful for us to stay connected to what's going on. And so they really appreciate us doing it. And so, yes, it's a small thing, but we think it's very important and we think robust communication is very critical in terms of the entire experience of working with advisors and their clients. And Oh yeah, that's my disclosure, my disclosures. And so now I'll turn it back to you, Ben, I think and you can drive from here. Yeah. Thank you, Fritz. Awesome overview of the total return and conservative strategies. But certainly as we just discussed like they, they have a great spot in in a diversified portfolio. And I like the way that you ended that as well because I cues up what I was going to say about both your firms is your the collateral that both of you are putting out is is top tier. I know you're both willing to get on the phone, you're very you know advisor focused as our team is as well. So that goes out to everybody. You know, if you need assistance with building portfolios or talking about these strategies that all three of us in our firms are, are really here to help. So but we brought Kim back in. So just to queue that up, now we've got this kind of special section about how do we think about using main and Three Edge together. Kim, I'll pass it to you first here. Yeah. Thank you, Ben. Fritz, that was awesome. Yeah, this is, as Fritz mentioned, we've known each other for 15 years. I know his partner, Steve. I know. I know is is. Eric, so there there's a lot of kind of connective tissue that makes a lot of sense about looking at how these strategies, these models can be built collaboratively and then used by those of you who are on this call and other advisors. So starting out you have, you know, best of breed firms that were pioneers and early adopters. As as Fritz mentioned, there was a crew of us that were early ETF strategist and we had what was unique with with Fritz and Steve's predecessor firm is that like us they used real client money. There are a lot of the ETF strategist that went into the kitchen and and built some back tested models. That were kind of what we would, you know, the the advisor would come or the manager would come out and say, well this is what I would have done. It's like all right, as we all know, we've never met a back tested model. That's not good because otherwise. Show it to people. So live money, real returns, that was key. That was very, very key And then I think this high level investment philosophies that align on you know globally diversified. Fritz, I don't know if you've got any additional comments you want to kind of make to that slide specifically. No, I think you hit it. I mean you know, I I I feel that you know what we do is very different from what you do and vice versa. And and you know to me that's really the, the, the feature of that makes us a this collaboration so attractive. So I think you nailed it. Yeah, absolutely. If we look at this next slide here. That maybe. Fritz, I'll let you go ahead and talk to this one here. The winning. The winning recipe. Whoops, did I click too far? Yeah, I think we skipped one. We got the, we got the individual strategies here first. Oh, yeah. There we go. Perfect. OK. So I'll hit this first and then I'll and I'll flip it over to you. For it. So this is again like Fritz just mentioned there. It really is looking at the complementary nature of how these strategies kind of blend together. So the active sector rotation that is a core equity position. We've always said that you can, you can kind of pair us up in that area. Maybe there's. Single stock, higher growth, higher concentrated managers that you can satellite, but we believe that active sector rotation should be a core component and a core equity position and then the buy right it's an alternative again living as I mentioned between the wall fixed income, investment grade, fixed income in the wallpaper more of a pure equities, so also trying to act as a volatility dampener. And it does a lot of that by by the protective nature if you're selling calls in the money and then also by having an additional stream of return, in this case premium income that also acts as a as a dampener. And Fritz, I'll flip it to you on your, on your two strategies, right. And so you're taking, you know, 22 equity strategies and you're adding our strategy which is often times a replacement for a fixed income strategy. And so you're really adding a layer of risk management in our capacity to dial back risk when necessary and just by the fact that we're so globally diversified holding things like commodities, gold and other asset classes. And so I love the combination of the three strategies because they're all focused on, yes, we want to generate returns, but we want to take as little as risk as possible to generate those returns. So it's not just exposing you to, oh, here's pure beta, hope the market goes up. No, you have two groups that are really focused on. We want to make returns, but we want to take as little risk as possible in our effort to do that. Yeah, that's that's exactly and So what you get here I like this. Fritz, you want to, you want to address this slide. I mean I, you know, I think we can, you know I think we can jump even to the to the next slide, you know because this shows the, the, the file, I'll give this my shot. But you know this shows the five flavors. So what you have here is from the most aggressive to the most conservative and also in between different levels and percentage allocations among the three strategies between the two firms. And so it's really tailor made. It's right there. You don't have to as an advisor try to figure out, you know how should I combine these, how much of this should I have and how much of that we've done that work in the front end for you. So you can, you know, you have a conversation with a client and you say, oh, you know what, you're definitely a growth and income. You're in the middle strategy here. That's the one I'm going to apply to you. So you know, it's just really an an elegant solution and I tip my hat to the folks at Main because they have more experience doing this than we do in terms of you know, collaborating and and combining strategies. So you know they educated us a great deal and and and showed us how this could be such a powerful tool. Anything you want to add out there, Jim? Yeah, one other thing I know this week, both of our firms. Fritz have had our, our team members that are out there visiting advisor. So Jonathan who's your salesperson obviously based down in Los Angeles, he's on the road with Rob Whelan who's one of my team members who's based in Austin, TX. So the two of them are actually out talking to advisors this week about these types of recipes. So that's a another kind of leg of the extension of the collaboration but. Definitely both of our teams. For any of you advisors that are on the call, we can definitely walk through different model proposals that would fit the needs and the solutions that you need for your client, your specific clients needs. And these are just some examples to kind of give you an idea, get the, get the the kind of the juices flowing to like oh, there we go. That's how I can look. And one thing I'll just add to that that you know we're not firms with $100 billion in assets under management. You know we, we do what we do, we do it, we do it well and we love what we do. And so regardless of people whether they choose to work with us or not, that's fine. We appreciate you listening. But one thing that I think will come through if you engage with our two firms in this collaboration is we are really committed to what we do. We love it, we enjoy it And I think that comes through when we speak to advisors and their clients and you know I think that's important. That could be very, very helpful and contagious to some extent. So we're just you know, thankful that we have this collaboration that we're on the Orion platform and now working with Maine, you know so and as Kim mentioned, we're already out in the field talking about these strategies with advisors. So looking forward to continuing. Yeah, Ben, we'll flip it back to you. Thanks, guys. Let's let's do some Q&A. We got a little less than 10 minutes. So if we don't get to your question, we will follow up with you and get you all the all the right answers that you need. First one, let's see this one's for Kim. How frequently are call options sold against the underlying security in the buy ride strategy? Yeah, that's a great. That's a great call. So typically what we do is we'll barbell it and we'll typically have six month duration for half of the portfolio and 12 month for the other half of the portfolio. And that six month one means then that that when we get to that six month period there, we'll go ahead and rewrite them. We may rewrite them anywhere between one and six months, but the sweet spot typically is 6 and 12 months. One other thing I would just throw on it, if we're trying to achieve mid to high single digit returns and if I can sell actually the entire portfolio 12 months out. And I can get a 1011% type of return for the premiums and dividends. It's the old adage when you see the bear shoot the bear, but in general 6 to 12 months. So you got a couple rights a year? Awesome. And then I'll throw one to you, Fritz. So the last two years we've really seen a lot of correlation between stocks and bonds. And you are using more real assets in, in your portfolios, you're using those other diversifying asset classes. So how should advisors really be thinking about incorporating these additional asset classes, especially when we're seeing such high correlations between, you know, the typical stocks and bonds in the 60? 40, well that, yeah, that's right. And if you look at 2022, for example, the best performing asset classes that we had were commodities. They were up 15% last year. And So what he brings up is a very or she brings up is a very important point if you think about the seasons of the market. Because if you're only thinking about stocks and bonds, you're only covering half of those cycles. You have the periods of time where neither stocks nor bonds are going to do well and you're going to need to have those real assets in the portfolio and that would be you know again as I said it would be gold and commodities. And we're relying on our model research to give us an indication as to whether that's where we might be headed. And if so, then it's going to tell us that we should have more of the portfolios allocated to those real assets and a credit contraction is another one. You know it's when you get into a period where basically liquidity is getting extracted from the financial system, it's it's very hard to bang out a return at that point. The model is saying you really need to be in very short term almost cash equivalent vehicles to get through that period of time. So again that's another period of time or another cycle or another season where neither your stocks or bonds are really going to help you. So we're relying on our model to tell us that. And what we're saying to his advisors is, yes, you should take advantage of all those. But let us who've spent 40 years building our models, looking at the behavior of these different asset classes in different environments, let us do that for you and perfectly happy for you to take the credit from your clients. That's great. I mean our job is to make the advisor look good. If we can do that and then the client will be happy, we'll be everybody will win. And so I would say yes, it's much better to have more arrows in your quiver. You know, it's just a wider horizon of asset classes that you can put to work and that's exactly what we are seeking to do through our approach, which is always globally diversified across asset classes. And Kim, I think by right can be put in this correlation your conversation as well. So anything you want to kind of add to that? Yeah, I would just add that you know traditionally alternatives have had you know it, it's they've had a difficult time delivering on their promise and it's, it's again if you can structure them and find the right place in the portfolio, like sometimes people will try to you know conflate the alternatives with pure equities over a long cycle and you're not going to win in that case there. But if you have them and you and you're able to find that dampening ability, you're able to use those premium incomes in the case of of the buy right there to really kind of play around within those within those cycles. It does. It does matter a lot. And again like you know kind of like Fritz was saying last year you had you had commodities and energy obviously. Ended up being non correlated to the markets and if you were selling a lot of premium and you were in the money, you were non correlated to the market too. So along this kind of same conversation and each of you have touched on it a little bit, but the Fed is maybe slowing down their their rate hiking we it's part of that uncertainty piece is, is inflation coming back, are we higher for longer, are we you know are is there cuts coming next year in this current? We'll call it a current hire for longer environment. How are each of you thinking about your portfolios and kind of how to navigate this new regime around interest rates? Yeah. OK. So definitely, I think the first thing that comes out of it is that part that I mentioned the past 10 years investment grade fixed income has only delivered one point which. Not locked, but if you have a starting point on the Bloomberg aggregate in the high fours right now, that's a little more attractive. That's a little more attractive, but it's not enough to get you to that seven plus percent that clients really need to kind of. Be in a position to have the portfolio doubling every 10 years and kind of achieve the goals that they're that they're setting. You still need some sort of a alternative, you need some sort of a rotation that that Fritz is doing or you need some sort of premium income and a buy right to be able to do it or pure equities to happen. So we continue to believe that that that. All of those situations are going to continue here. I would remind people that and I know we all have these recency biases here, but the recent period of the last dozen plus years with virtually no rates at all, that was the anomaly. If you go back to the prior to the great financial crisis, they're having 10 year rates at 5% was very normal, very, very normal. I think Goldman Sachs threw a stat out which is I love it when they say the 300 years, you're like really you got data from 300 years. OK we'll we'll go with it. But the 300 year average on the on the 10 years between 4 1/2 and 5% but my lifetime I I I know I'm old but I haven't been around for 300 years but in my lifetime there it's you know 4 1/2 to 5% for a 10 year is. Really normal companies did just fine in the 90s making money. So as you adjust to that, we're getting back to the real normal, yeah. So finally I think we got room for for maybe one more question, the dollar also kind of jumping around. This, this effects how you know US versus international may perform. There's some some relationships with inflation going on there. How do you view the dollar? Does it affect your portfolio decision making? How should advisors be thinking about the dollar? So I'll take a crack at that. And and definitely we consider currency exposure when we do our model research because we're investing globally. So we're looking Europe base or Far East emerging markets. We're looking at all those markets. And so we have to take into account the currency exposure. And in fact this year has been a good example of that because our model research was telling us that we felt that the US market was significantly overvalued. So we've stated our minimum there even though you know it it it it's done quite well, but we stayed our minimum there. But where we did invest was in Japan, because the Japanese market, when we did our research was much more fairly valued. Plus you had a central bank in the Bank of Japan that was going a completely different direction from all the other world. Major central banks that were tightening. The Japanese, you know, have, as they have for many, many years now, had excessively loose monetary policy. And the here's an advantage of the ETF market. There are all kinds of ways to invest in Japan and hedge the currency out simply by choosing one of many ETF's that are available. And so not only did the Japanese and so we chose to make an investment that some of the ETF's we bought had exposure to the Japanese yen because it was getting close to that 150 mark where we're afraid maybe the Bank of Japan will come in. But we also carried for much of the year exposure to Japanese equities that were currency heads. And if you look where we are now and look back the currency hedge exposure to Japanese equities probably did twice as well as the just the the investing in the Japanese equity market through the Japanese yen. So we do definitely look at currencies. You know, we saw the dollar continue to move up, but the capacity to use the ETF market to take advantage of whether we want or don't want currency exposure, it's it's really quite nice. It gives us a lot of flexibility. Yeah, Ben, I would just add one thing to that. Our research has shown that I mentioned that we lose use a lot of those factors and then try to find out correlation in the international markets taking aside the hedge portion that Fritz just talked about. But that is a very important part, the number one highly correlated factor to whether or not international equities. Will be able to outperform US is the direction of the dollar. If the dollar is going up and strengthening like it did from 2011 all the way to September of last year, you can't fight it. the US equity markets are going to significantly outperform the dollar. Looks like it peaked last September, kind of dropped down about 10 plus percent and then it it had this counter trend rally as rates look like they were going to continue to going up and Powell doesn't want to cut them. But that is key at least our research has has shown that. And the other thing to remember on international, it's structured more like large cap US value because you remember the S&P is very unique with almost 30% of it being tech driven. Most international markets are much more value. So it's really your comp should be large cap value US versus international? All right. Well, we are a few minutes over time, so we're going to call it there for questions if we didn't get to answer your question or if you have any follow-ups. Again, here is all the contact information for our team here at Orion and I'll make sure that Kim and Fritz get their input to you. If you send us any questions, a replay of this should be sent out in a few hours for you to distribute or watch again to pick up any pieces you may have missed. So thank you again for joining us today. Thank you for putting your trust in Orion Portfolio Solutions and have a great rest of your afternoon everybody. Thanks a lot, Ben. Thanks. _1717094622443

Portfolio Recipes: The Navigating Uncertainty Portfolio Recipe

Actively managed investment strategies can help investors navigate markets shrouded by uncertainty. With perceived economic headwinds and recession fears still dominating headlines, investing with managers who can adjust their allocations in evolving market conditions can be a key ingredient when building resilient portfolios.

Please join Ben Vaske, BFA, Sr. Investment Strategist, Kim Arthur, President and CEO of Main Management, and Fritz Foltz, Chief Investment Strategist at 3EDGE Asset Management as they share their insights on the process of creating a resilient and adaptive investment portfolio.

Don't miss this opportunity to enhance your investment skills and ensure that your portfolio is well-prepared to face uncertainty head-on. Register now and take the first step toward building an and adaptable investment portfolio.

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

Orion Portfolio Solutions, LLC d/b/a Brinker Capital Investments a registered investment advisor.

2861-OPS-10/17/2023

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