Tag Archive for: global markets

Introducing Warren Street Global Equity ETF (WSGE) – An Informed Approach to Diversification

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We’re thrilled to announce a major milestone for our firm and our clients: the launch of the Warren Street Global Equity ETF (NASDAQ: WSGE)!

This new Exchange-Traded Fund (ETF) is now available, bringing our disciplined investment philosophy to the public in a convenient, accessible format. This is an exciting step forward as we continue to provide sophisticated investment solutions while delivering on our fiduciary commitment.

The Warren Street Wealth Advisors team celebrates the launch with a visit to the NASDAQ MarketSite in Times Square, New York.

What is WSGE and Why Did We Create It?

The Warren Street Global Equity ETF (WSGE) is designed to be a smarter way to invest in the global stock market. The traditional choice has always been either a simple, broad index fund or a complicated, expensive actively managed fund. We created WSGE to give you the best of both worlds: global diversification with a smart strategy built to enhance returns.

Focus on You: The Key Client Benefits

While the investment strategy is robust, the most important reason we created WSGE is to provide direct, tangible benefits to you, our clients, and to uphold our fiduciary standard:

  • Embedded Tax Efficiencies: As an ETF, WSGE is structured to minimize capital gains distributions compared to traditional mutual funds. This powerful tax efficiency helps you keep more of your investment returns, making your portfolio work harder over the long term.
  • Economies of Scale: By bundling diverse global exposures and our proprietary strategy into a single vehicle, we achieve significant economies of scale. This approach reduces complexity and overall costs, effectively providing you with institutional-quality management at a lower expense.
  • Uniformity Across Clients: WSGE ensures every client benefits from the exact same research-driven exposure and proprietary factor tilts. This uniformity across clients leads to greater consistency, streamlined execution, and clearer reporting, regardless of account size.
  • Time Savings & Simplicity: The single-fund structure drastically simplifies trade execution, rebalancing, and overall portfolio maintenance. This provides time savings for both our advisory team and you, the client, allowing us to focus more on your comprehensive financial plan, retirement goals, and tax strategies.

Learn More

When you invest in WSGE, you’re accessing the same level of rigorous due diligence that defines Warren Street Wealth Advisors. We meticulously select the fund’s underlying investments, focusing on quality management, low cost, and alignment with our goals.

We are proud to bring this innovative solution to market and look forward to partnering with you on your journey toward long-term capital appreciation.

To learn more about the fund, view the prospectus, and review important disclosures, please visit warrenstreetetf.com.

Phillip Law, CFA

Senior Portfolio Manager, Warren Street Wealth Advisors

Investment Advisor Representative, Warren Street Wealth Advisors, LLC., a Registered Investment Advisor

The information presented here represents opinions and is not meant as personal or actionable advice to any individual, corporation, or other entity. Any investments discussed carry unique risks and should be carefully considered and reviewed by you and your financial professional. Nothing in this document is a solicitation to buy or sell any securities, or an attempt to furnish personal investment advice. Warren Street Wealth Advisors may own securities referenced in this document. Due to the static nature of content, securities held may change over time and current trades may be contrary to outdated publications. Form ADV available upon request 714-876-6200.

Important Information

The Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. This and other important information is contained in the prospectus, which may be obtained by following the links Prospectus and Summary Prospectus or by calling +1.714.876.6200. Please read the prospectus carefully before investing.

The Fund is actively-managed and is subject to the risk that the strategy may not produce the intended results. The Fund is new and has a limited operating history to evaluate.

Median 30 Day Spread: is a calculation of Fund’s median bid-ask spread, expressed as a percentage rounded to the nearest hundredth, computed by: identifying the Fund’s national best bid and national best offer as of the end of each 10 second interval during each trading day of the last 30 calendar days; dividing the difference between each such bid and offer by the midpoint of the national best bid and national best offer; and identifying the median of those values.

Basis Points (bps): A unit of measure used in quoting yields, changes in yields or differences between yields. One basis point is equal to 0.01%, or one one-hundredth of a percent of yield and 100 basis points equals 1%.

Equity Investing Risk. An investment in the Fund involves risks similar to those of investing in any fund holding equity securities, such as market fluctuations, changes in interest rates and perceived trends in stock prices. The values of equity securities could decline generally or could underperform other investments. In addition, securities may decline in value due to factors affecting a specific issuer, market or securities markets generally.

Fixed-Income Risk. The market value of fixed-income securities will change in response to interest rate changes and other factors, such as changes in the effective maturities and credit ratings of fixed-income investments. During periods of falling interest rates, the values of outstanding fixed-income securities and related financial instruments generally rise. Conversely, during periods of rising interest rates, the values of such securities and related financial instruments generally decline. Fixed-income investments are also subject to credit risk.

Large-Capitalization Companies Risk. Large-capitalization companies may trail the returns of the overall stock market. Large-capitalization stocks tend to go through cycles of doing better – or worse – than the stock market in general. These periods have, in the past, lasted for as long as several years.

Mid-Capitalization Companies Risk. Investing in securities of mid-capitalization companies involves greater risk than customarily is associated with investing in larger, more established companies. These companies’ securities may be more volatile and less liquid than those of more established companies. Often mid-capitalization companies and the industries in which they focus are still evolving and, as a result, they may be more sensitive to changing market conditions.

Depositary Receipt Risk. ADRs and GDRs are generally subject to the risks of investing directly in foreign securities and, in some cases, there may be less information available about the underlying issuers than would be the case with a direct investment in the foreign issuer. ADRs are U.S. dollar-denominated receipts representing shares of foreign-based corporations. GDRs are similar to ADRs but are shares of foreign-based corporations generally issued by international banks in one or more markets around the world.

Risk of Investing in Other ETFs. Because the Fund may invest in Underlying ETFs, the Fund’s investment performance is impacted by the investment performance of the selected Underlying ETFs. An investment in the Fund is subject to the risks associated with the Underlying ETFs that then-currently comprise the Fund’s portfolio. At times, certain of the segments of the market represented by the Fund’s Underlying ETFs may be out of favor and underperform other segments.

Focus Investing Risk. The Fund seeks to hold the stocks of approximately 40 companies. As a result, the Fund invests a high percentage of its assets in a small number of companies, which may add to Fund volatility.

Foreign Investment Risk. Returns on investments in foreign securities could be more volatile than, or trail the returns on U.S. securities. Investments in or exposures to foreign securities are subject to special risks,  including differences in information available about issuers of securities and investor protection standards. In addition, foreign securities denominated in other currencies could decline due to changes in local currency.

Factor-Based Investing Risk. There can be no assurance that the factor-based investment selection process employed by the Sub-Adviser will enhance the Fund’s performance. Exposure to the different investment cycles identified by the Sub-Adviser may detract from the Fund’s performance in some market environments.

ETFs may trade at a premium or discount to their net asset value. ETF shares may only be redeemed at NAV by authorized participants in large creation units. There can be no guarantee that an active trading market for shares will exist. The trading of shares may incur brokerage.

This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. We make no representation or warranty as to the accuracy or completeness of the information contained herein including third-party data sources. The views expressed are as of the publication date and subject to change at any time. No part of this material may be reproduced in any form, or referred to in any other publication without express written permission. References to other funds should not to be interpreted as an offer or recommendation of these securities.

An investment in the Fund involves risk, including possible loss of principal. Exchange-traded funds (ETFs) trade like stocks, are subject to investment risk, fluctuate in market value and may trade at prices above or below the ETF’s net asset value (NAV), and are not individually redeemable directly with the ETF. Brokerage commissions and ETF expenses will reduce returns. ETFs are subject to specific risks, depending on the nature of the underlying strategy of the Fund, which should be considered carefully when making investment decisions. For a complete description of the Fund’s principal investment risks, please refer to the prospectus.

Shares of the Funds Are Not FDIC Insured, May Lose Value, and Have No Bank Guarantee.

The Fund is distributed by PINE Distributors LLC. The Fund’s investment adviser is Empowered Funds, LLC, which is doing business as ETF Architect. Warren Street Wealth Advisors, LLC serve as the Sub-advisers to the Fund. PINE Distributors LLC is not affiliated with ETF Architect or Warren Street Wealth Advisors, LLC. Learn more about PINE Distributors LLC at FINRA’s BrokerCheck.

ETFAC-4941235-10/25

Fighter Planes and Market Turmoil

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Have you been reading the daily headlines—watching markets stall, recover, and dip once again? If so, you may be wondering whether there’s anything you can do to avoid the motion sickness. 

If you already have a well-structured, globally diversified portfolio tailored for your goals and risk tolerances, our answer remains the same as ever: Your best course is to stay the course. Remember, our investment advice is aimed at helping you successfully complete your long-term financial journey. As “The Psychology of Money” author Morgan Housel has observed:  

“Bubbles do their damage when long-term investors playing one game start taking their cues from those short-term traders playing another.”

The Case of the Missing Bullet Holes

Have we ever told you the tale of the World War II fighter jets and their “missing” bullet holes? Today’s bumpy market ride seems like a good time to revisit this interesting anecdote about survivorship bias. 

The story stems from studies conducted during World War II on how to best fortify U.S. bomber planes against enemy fire. Initially, analysts focused on where the returning bombers’ hulls had sustained the most damage, assuming these were the areas requiring extra protection. Fortunately, before the planes were overhauled accordingly, statistician Abraham Wald improved on the evidence. He suggested, because the meticulously examined planes were the survivors, the extra fortification should be applied where they had fewer, not more bullet holes. 

How so? Wald explained, the surviving planes’ bullet-free zones were not somehow impervious to attack. Rather, when those zones were getting hit, those planes weren’t making it back at all. Survivorship bias had blinded earlier analyses to the defenses that mattered the most. 

Surviving Market Turbulence

You can think about the markets in similar fashion. For example, consider these recent predictions from a well-known market forecaster (emphasis ours): 

“Jeremy Grantham, the famed investor who for decades has been calling market bubbles, said the historic collapse in stocks he predicted a year ago is underway and even intervention by the Federal Reserve can’t prevent an eventual plunge of almost 50%.” 

— ThinkAdvisor, January 20, 2022

At a glance, that sounds pretty grim. But read between the lines for a hidden insight: He was also predicting the same collapse a year ago??? Yes, he was: 

“Renowned investor Jeremy Grantham, who correctly predicted the Japanese asset price bubble in 1989, the dot-com bubble in 2000 and the housing crisis in 2008, is ‘doubling down’ on his latest market bubble call.” 

— ThinkAdvisor, January 5, 2021

What if you had heeded Grantham’s forecasts a year ago, and left the market in January 2021? Time has informed us, you would have missed out on some of the strongest annual returns the U.S. stock market has delivered in some time. 

Now What?

If market volatility continues or worsens, brace yourself. You’re going to be bombarded with similar predictions. Few will be bold enough to foretell the exact timing, but the implications will be: (1) it’s going to happen soon, and (2) you should try to get out before it’s too late. 

Some of these forecasts may even end up being correct. Bear markets happen, so anyone who regularly forecasts their imminent arrival will occasionally get it right. Like a stopped clock. Or those continually looping infomercials on how “now” is the best time to load up on silver or gold. (Incidentally, many of these same precious metal purveyors are among those routinely predicting the end is near for efficient markets.)  

Bouts of market volatility are like the bullet holes we can see. They’re not pretty or fun. But interim volatility isn’t usually your biggest threat … attempting to avoid it is. The preparations we’ve already made may be less obvious, but they’re there—including tilting a portion of your portfolio into riskier sources of expected return for long-term growth, fortifying these positions with stabilizing fixed income, and shoring up the entire structure with global diversification. 

This brings us to the real question: What should you do about today’s news? Unless your personal financial goals have changed, your best course is probably the one you’re already on. That said, we remain available, as always, to speak with you directly. Don’t hesitate to be in touch with any questions or comments you may have. 

Phillip Law, Portfolio Analyst

Wealth Advisor, Warren Street Wealth Advisors

Investment Advisor Representative, Warren Street Wealth Advisors, LLC., a Registered Investment Advisor

The information presented here represents opinions and is not meant as personal or actionable advice to any individual, corporation, or other entity. Any investments discussed carry unique risks and should be carefully considered and reviewed by you and your financial professional. Nothing in this document is a solicitation to buy or sell any securities, or an attempt to furnish personal investment advice. Warren Street Wealth Advisors may own securities referenced in this document. Due to the static nature of content, securities held may change over time and current trades may be contrary to outdated publications. Form ADV available upon request 714-876-6200.

March Market Madness

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During this time last year, the NCAA canceled March Madness. With college basketball off the table, we were given a different type of madness: Market Madness. The S&P 500 drew down a total of 34% from peak to trough as COVID-19 wreaked havoc across global markets. This week marked the one year anniversary of that drawdown’s market bottom.

In September 2020, we wrote about the astounding fiscal and monetary policy action delivered by both the Federal Reserve and congressional lawmakers in response to the coronavirus. Although we complimented both the central bank and congress, the 2020 Most Valuable Player award quite honestly belongs to Jerome Powell and the Fed.

Today, after fending off last March’s Market Madness, the ball is no longer in the Fed’s court. Instead, The Fed is embodying a more reactive approach, awaiting signs of inflation to cross their 2% target before considering rate hikes or tools such as yield-curve control. Now, it’s our congressional leaders’ turn to play offense using fiscal policy. Their most recent time-out play is the $1.9 trillion stimulus package with embedded $1,400 stimulus payments expected to boost inflation.

Is Inflation Bad?

Let’s take a step back and consider why the Fed is setting a target with inflation. It’s important to distinguish that inflation isn’t as daunting as what’s ingrained in our history books. Sure, the inflationary tales of Zimbabwe and the Weimar Republic might seem scary, but the truth is such situations are rare and due to mismanaged policy in less-developed nations. Typically, mild inflation is a sign of rising consumption and increased demand. Today, this type of inflation can be recognized as reflation1; and in our case, reflation would signify that a return to normalcy is en route. 

Market expectations for inflation are no laughing matter. A re-opening is expected to usher in increased spending in the form of pent-up demand. Input prices such as lumber and copper are already soaring. The five year breakeven treasury rate, which measures investor expectations for inflation, rose to its highest over point ever since 2014. Bonds, whose kryptonite is inflation, witnessed a sell-off that trickled into tech stocks.

But are markets correct to expect this much inflation? Or are markets overshooting their expectations by falling for this inflation pump fake? Perhaps our stay-at-home habits will prevail in the long-run and spending will not stay elevated, resulting in lower inflationary pressures. If so, we could see a rebound in bond prices and tech names. Nevertheless, this is the hotly debated topic among investors at the moment. 

Run The Play

This brings us back to the analogy with our administration’s most recent time-out-play. The $1.9 trillion relief bill is bringing hope to the workers, businesses, institutions, and communities that have struggled throughout this pandemic. As you can see in the chart below, the $1,400 stimulus payments represent a large percent of the package totalling $422 billion. It makes sense for investors to expect increased inflation as consumers now have higher disposable incomes and propensity to consume – but there is a catch.

Source: Committee For a Responsible Federal Budget (CRFB)

What will happen to actual inflation if these stimulus payments don’t make it back into the economy, but instead find their way into the stock market? A survey by Deutsche Bank revealed that individuals between the ages of 25 to 34 intend on placing 50% of the received payment into the stock market. Ultimately, the survey found that younger and high income earners eyed the stock market as the targeted destination for this income.

Source: Deutsche Bank Asset Allocation, dgDIG, RealVisionFinance
Data presented on 3/08/2021

The Deutsche Bank survey, like any other, is going to be scrutinized for sampling error, but we don’t see something like the above being too far-fetched. The recent retail frenzy with “meme stocks2” like GameStop, Blackberry, and AMC has given rise to retail investing. Popular communities like r/WallStreetBets on Reddit have become a breeding ground for investors to commingle. Even more likely are your neighbors, who watched people get rich on the market’s 2020 rally, itching to pummel some of their stimulus money into the S&P 500.

These $1,400 payments are intended to increase demand for goods and prompt businesses to hire more workers, eventually raising wages. If these payments seek risk-assets instead, we could see a halt in the reflation narrative and a prolonged unemployment recovery.

Another risk to consider is the risk of financial stability. We’re seeing speculative behavior, especially from retail investors piling into stocks with less regard for the underlying fundamentals. At the end of the day, it’s quite possible to see a lack of wage growth in the economy while management teams of inefficient and highly-indebted companies get rewarded for little to no profitability.

The Bottom Line

We aren’t here to debate whether or not you should save or spend the money, let’s leave that to Reddit and Twitter. However, should a substantial portion of stimulus payments see capital markets as a more attractive destination than the underlying economy, the risks to reflation and financial stability must not be overlooked.     

We’ll see whether or not the $1.9 trillion time-out play will win the economic recovery game and prevent further Market Madness… if not, let’s hope it at least takes us into overtime.

Footnotes:

  1. Reflation represents increased price levels as a result of monetary or fiscal policy as a means to combat deflation.  
  2. “Meme stocks” are stocks that have gained traction from retail audiences such as Reddit or investment communities. GameStop and AMC are just a few of the many names with this retail comradery, earning these stocks the nickname “meme stocks” and causing a surge in prices throughout early 2021.

Sources: 

Committee For a Responsible Congressional Budget 

Deustche Bank Survey

YCharts

Phillip Law, Portfolio Analyst

Wealth Advisor, Warren Street Wealth Advisors

Investment Advisor Representative, Warren Street Wealth Advisors, LLC., a Registered Investment Advisor

The information presented here represents opinions and is not meant as personal or actionable advice to any individual, corporation, or other entity. Any investments discussed carry unique risks and should be carefully considered and reviewed by you and your financial professional. Nothing in this document is a solicitation to buy or sell any securities, or an attempt to furnish personal investment advice. Warren Street Wealth Advisors may own securities referenced in this document. Due to the static nature of content, securities held may change over time and current trades may be contrary to outdated publications. Form ADV available upon request 714-876-6200.