Investing for Retirement: Preeminent Convention

October 20, 2017

By Michael Choniski, Trendhaven Investment Management

I received a beautiful brochure from JP Morgan Asset Management that said that their SmartRetirement strategies have been widely recognized for their strong risk adjusted and consistent returns. These are target date funds that invest in other funds and vary the exposure both across and within different asset classes as the investor approaches a targeted retirement date. This active portfolio allocation over time is called their “glide path”. They speak of how their vast human, financial and information resources have resulted in their being the best performing target date funds in the industry. They have a 10-year return and volatility graph to prove it. Their performance does look better than their competitors’, and the overall presentation is quite reassuring.

A team of experienced investors, most of whom have spent their entire careers at JP Morgan, employ a multifaceted approach to “temper the greatest risk of all – whether investors will be able to afford to retire.” They take into consideration their capital markets forecasts, views on potential regulatory changes and even assumptions about the investors’ own behavior. As a whole, the overwhelming display of institutional narcissism works, until you look more closely at the numbers. How is it that such a preeminent firm can’t do better than this? I own my own advisory and work with a few other analyst/advisors. How can my comparatively focused investment approach produce better results than theirs? Simple. JP Morgan, like the rest of the industry, is managing investment risk and return with diversification and assumptions about future returns and correlations, applying the same basic tenets of modern portfolio theory that first appeared in 1952. This theory is based on the belief that trend-following like that used in Trendhaven’s Managed Risk strategy is impossible, despite its existence in reality. It’s your retirement. Don’t get blinded by preeminent convention.

All information in this document is subject to updating, completion, revision, verification and amendment. This document does not constitute or form any part of an offer to sell or any solicitation or invitation of any offer to purchase or subscribe for any type of investment. No reliance may be placed for any purpose whatsoever on the information contained in this document or on its completeness. This document is being provided to you solely to assist you in deciding whether or not to proceed with further investigation of the described investment strategy. Trendhaven began managing separate accounts in April 2014. Performance before that time is that of the owner / licensor of the same quantitative analytic used by Trendhaven. Interested investors may request and receive a list of the trade dates, securities used, purchase, sell and recent prices in implementation of the strategy over the last year. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities on this list.


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