Customized, Diversified Investment Portfolios
Clarity Capital Advisors offers low-cost, tax-efficient investment portfolios tailored to your individual needs and goals.
We recognize that not all investors are well-served by model portfolios, which is why we offer Customized Investment Portfolio options. This can be especially helpful for someone who already has a sensible portfolio of low-cost mutual funds and ETFs from iShares, Fidelity, Schwab, Vanguard, Avantis Investors, and Dimensional where it would be costly from a tax standpoint (i.e., significant embedded capital gains) to transition it into one of our highly diversified portfolios. Our customized portfolios give investors the opportunity to immediately reduce their advisory fees while retaining their existing asset allocation and investments.
The Importance of a Personalized Investment Policy Statement
An Investment Policy Statement (IPS) describes the investment philosophies and investment management procedures to be utilized in consideration of your long-term goals. The principal reason for developing a customized investment policy and for putting it in writing is to enable you and us to protect your portfolio from ad hoc revisions of a sound long-term policy. Without an investment policy, in times of market turmoil, clients are often inclined to make impromptu investment decisions that are inconsistent with prudent investment management principles. An IPS is intended to provide a well thought out framework from which sound investment decisions can be made. At Clarity, each client receives a personalized IPS based on their time horizon, liquidity needs, risk tolerance, tax situation, and other special circumstances.
Our Investment Philosophy is Based on Academic Research, Not Wall Street Hype
When designing our investment portfolios, we look to the extensive Nobel-Prize winning academic research conducted by professors such as Eugene Fama (2013 Laureate for his work in Market Efficiency and Asset Pricing Theory) and Harry Markowitz (1990 Laureate for his formulation of Modern Portfolio Theory).
Our tax-efficient investment portfolios are comprised of no sales commission or 12b-1 fee mutual funds and ETFs from Vanguard, Dimensional, and Avantis Investors. Each customized portfolio is designed to capture the returns offered by the global financial markets based upon our clients' individual willingness, ability, and need to assume risk.
The Core Investment Strategy
A Smarter Way to Invest
Low cost. No sales commissions. No hidden 12b-1 fees.
Core ETFs and Mutual Funds: Lower Costs Equate to Higher Expected Returns
At Clarity, we utilize total market (Core) mutual funds and ETFs rather than specific asset class funds. This approach enables our clients to have lower overall expense ratios (fund costs) and lower trading costs (and possibly taxes). For example, if a small cap stock transitions to a large cap stock, the small cap fund must sell it and the large cap fund will buy it. This can create capital gains within the small cap fund that may be passed along to investors, in addition to the trading costs to sell and buy. In a Core fund, this type of trading is minimized. We call this smart investing.
Tax-Efficient Core ETFs and Mutual Funds: Simplicity Over Complexity
Since utilizing core mutual funds favors simplicity over complexity, it is fair to ask if investors are sacrificing the opportunity for higher returns by not owning highly specific asset class funds such as international small value. Indeed, some advisors will argue that you should have at least a dozen different mutual funds in your portfolio (it certainly makes them look busy). We obviously disagree and not because it makes our job easier to manage fewer funds. Our portfolio management software, enables us to manage any number of funds, and for clients who have significant unrealized capital gains in investments they transfer to us, we do exactly that. While indeed (based on long-term historical data), there are allocations that have higher expected returns than the core mutual funds; those higher expected returns come at a price of higher risk (in the form of higher volatility or divergence from the returns of the market or both). Aside from diversification, there are no free lunches in investing. The bottom line is that investors should not conflate the issues of simplicity versus complexity and the expected returns of portfolios. At Clarity Capital Advisors, we prefer the core funds because they cover entire markets in an effective and efficient manner.
Each highly diversified Core Portfolio is competitively priced with very low weighted expense ratios varying from 0.05 to 0.18% annually. You will have exposure to over 13,000 stocks of different companies from 40 countries around the world, so no matter which one hits a grand slam, there is an excellent chance that you will own it. Your bond allocation will include government and investment-grade corporate bonds. For clients in high marginal tax brackets we may incorporate individual municipal bonds or municipal bond mutual funds within their taxable accounts. Learn more about our core (total market) mutual fund and ETF providers Dimensional, Avantis Investors, and Vanguard.
Trading Costs - Charles Schwab Inc.
As part of our commitment to full transparency in fees, we would like to share the costs associated with trading your investment accounts. Our custodian, Charles Schwab & Co., Inc., does not charge any annual account maintenance fees, wire transfer fees, or ACH transfer fees. Schwab enables us to buy and sell exchange-traded funds (ETFs) and individual stocks free of charge. Schwab imposes a trading cost of $24.00 or $45.00 per trade for trading mutual funds. Schwab charges a trading cost of $9.99 per trade to buy or sell the Dimensional mutual funds.
