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RGJ: Local Wealth Manager Debuts ETF

By Jason Hidalgo, jhidalgo@rgj.com

When it comes to picking an investment instrument, Laif Meidell hopes that more folks do the MATH.

That would be the Meidell Tactical Advantage ETF, which debuts publicly on the New York Stock Exchange Thursday under the ticker MATH.

The fund is an ETF, or exchange-traded fund, that invests in other ETFs, said Meidell, president of Reno-based American Wealth Management.

Unlike typical ETFs that are pegged to a certain index, such as the Standard & Poor’s 500, MATH is actively managed and invests in all sorts of funds from ETFs based on stocks to ETFs based on bonds.

“ETFs make a great investment vehicle because they’re so liquid, the internal costs are low, and there’s so much transparency,” Meidell said. “But there are periods of time when, say, owning Real Estate Investment Trust ETF isn’t a good idea and becomes a money-losing experience.”

By making MATH actively managed, the fund gets added flexibility to adapt to market conditions while retaining many of the advantages that make ETFs so attractive, Meidell said. Although MATH isn’t the first ETF to invest in other ETFs, it’s just one of a few that use a tactical approach to investing, Meidell said.

Unlike a strategic approach that places a set percentage of a fund’s allocations to certain types of funds or investments, tactical funds allow for more changes in a portfolio’s allocation — also known as a tactical shift — from one investment to another. This means that, theoretically, the fund could invest itself 100 percent in stocks or 100 percent in bonds if it chooses.

Although such scenarios are unlikely, it shows the amount of flexibility built into MATH. The flexibility is especially important when dealing with downturns that require a reallocation of funds, Meidell said.

“The portfolio is dynamic and able to migrate into other areas,” Meidell said. “It invests in very basic indices — the S&P 500, foreign markets and emerging markets. So these are basic simple areas, but research has shown that you can do well over the years by just being in the right indices and shifting away from those that are underperforming.”

Meidell stressed that the fund is not for people who want to capture a market rebound’s initial upswing or make money during downturns by shorting stock.

The basic philosophy that governs the formula used to determine MATH’s allocation is to keep as much of the gains made while the market is up by minimizing the losses during down cycles. The approach leads to less risk while still generating healthy returns over the long run.

“This fund can really fit an older person who wants to use it as a core holding while attempting to limit some downside risk,” Meidell said. “But it can also work for a younger person who wants a more aggressive portion of their portfolio to stay invested during the market’s more protracted moves up while also decreasing their stock exposure when the market is in long-term decline.”