• A Personal Solution with your Financial Future in Focus.

  • Customize your options according to your personal situation.

  • Minimize risk with diversified portfolios.

  • Chart a path to a successful financial future.

 
 
 
 
 

Welcome to GTG Wealth Management


The GTG Investment Philosophy


Academic-Scientific Investing
Diversification is Key
Modern Portfolio Theory
Asset Class Investing
The Importance of Tax Management
Asset Allocation
Three Factor Model 
Rebalancing
Exchange Traded Funds


 

Academic-Scientific Investing
According to the most recent data from Standard and Poor’s passive asset allocation has out performed 70-85% of actively managed over the long term. After accounting for the unwanted taxable distributions, excessive fees, and unnecessary turnover and other variables such as high-frequency trading, Efficient believes that active management strategies like stock picking and market timing are akin to betting against the house -- a loser’s game.   We believe that investors are best served by implementing a broad market, asset allocation methodology designed to reduce unnecessary drag on performance and ensuring a capital market rate of return.

Diversification is Key
Markets and asset classes do not move in tandem with another.  Diversification is a way in which investors can manage the volatility in their portfolio and increase the likelihood of investment success.   This veritable ‘free lunch’ can help investor’s weather volatile markets and control the risk in their portfolio.

Modern Portfolio Theory
Modern Portfolio Theory or MPT for short is the Nobel Prize winning work of Harry Markowitz.  MPT explains how to build an optimal portfolio for a given amount of risk (think volatility).  In other words, it is quite possible to achieve decent returns with relatively low risk.  By investing in a portfolio (think asset allocation) of asset classes (large stocks, small stocks, value stocks, international stocks, bond, etc.) you increase the mathematical odds of maximizing your returns since these asset classes don’t move up and down together or in the same way (think diversification).  

Asset Class Investing
The goal of asset class investing is to achieve the market rate of return rather than trying to BEAT the market.  By targeting specific asset classes (i.e., U.S. large companies, U.S. small companies, U.S. large value companies, U.S. small value companies, International companies, etc.), a prudent asset class allocation strategy allows you to forgo the need to forecast or predict the direction of the market.  The only action you will need to take is to rebalance the portfolio when the allocation targets are ‘out of balance’.

The Importance of Tax Management
It is a fact, taxes reduces return. Controlling and accounting for taxes is necessary for prudent portfolio management.  It is quite possible to eliminate the tax burden that comes with investing by prudent and efficient tax management.  

Asset Allocation
The asset allocation decision is one of the most critical decisions that you must make since the majority of investment return in your portfolio comes from the portfolio structure.  Since stocks and bonds behave differently, the goal of asset allocation is to maximize the portfolio’s expected return in relation to its risk.

Three Factor Model 
Eugene Fama, Sr. and Kenneth French of the University of Chicago identified that there are three factors that explain investment returns in a portfolio.  By constructing portfolios based on this research, you have the potential to capture returns in the market.  Until Messrs. Fama and French developed this three factor model, most investment portfolios were constructed utilizing a single factor approach. This single factor approach known as the Capital Asset Pricing Model (CAPM) posits that stocks are riskier than bonds but provide a higher return than bonds.  William Sharpe (1990 Noble Prize) first expressed CAPM in the early 1960’s.  Messrs. Fama and French discovered the other two factors in the early 1980’s by researching stock market returns going back to the early 1920’s. 

GTG Wealth Management utilizes the Three Factor Model by engineering and constructing portfolios based on these three factors:

  • The Market Factor-what is the mix of stocks to bonds in the portfolio?
  • The Size Factor-what is the mix of small stocks to large stocks?
  • The Value Factor-what is the mix of value stocks?


Rebalancing
Since asset classes do not move in the same direction all the time, the asset allocation percentages will drift from the original allocation targets. It is imperative to maintain the allocation targets so you can capture the asset class returns in the portfolio. Rebalancing adheres to the simple principle of buying low and selling high.

Exchange Traded Funds
Believe it or not, ETFs have now been around for over 15 years. The first ETF in the U.S. was the SPY. Known as SPDRs or ‘spiders’, the Fund has grown to become the largest ETF in the world. As of June 2009, the size of the U.S. ETF industry was over $590 billion, including net inflows of $176 billion last year. Since many ETFs invest in targeted asset classes, they are ideal for investors seeking a passive, structured strategy. 

Other key characteristics of ETFs:

  • ETFs cover all major asset classes such as equities, bonds, currencies, and commodities.
  • Equity ETFs are baskets of investments that represent a diversified group of companies (similar to mutual funds).
  • Unlike mutual funds, however, ET

 

Some equity ETFs mirror well-known indexes like the S&P 500 Index1 or the Dow Jones Industrial Average2, and some track securities specific to a particular industry or country.