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When CNBC ranked the top U.S. advisory firms in the U.S. last month, Albion Financial Group placed third. Chief Investment Officer Jason Ware told ETF.com’s Heather Bell about how the firm uses ETFs and discussed principles driving its investment approach.
ETF.com: What’s Albion’s investment philosophy, customer base, etc.?
Jason Ware: Our investment philosophy is very much based on thinking and acting long term. We want to own great investments for our clients that are well diversified. And just like Buffett says, our preferred holding period is forever. That's not the case all the time. If fundamentals change, we will make changes in the portfolio. But our turnover is fairly low.
We are a registered investment advisor. We've been in business for 40 years, starting in 1982. Fast forward 40 years later, and we have about $1.5 billion under management.
We work with about 700 high net worth families, which amounts to about 2,000 accounts. We are very much a holistic wealth management firm. We do the investment management, and as CIO, I oversee the investment research and the portfolio design and how that's implemented in terms of our clients’ portfolios. And we do financial advice.
ETF.com: Long or short?
Ware: We're long only, so we're not trying to short stocks. We're not traders, and we're not trying to make guesses on where the market is going to go over the short term or what ETF is going to outperform which or which stock we should own for the next six months.
We use individual equities; we also use ETFs both on the equity and fixed income side. We do individual bonds for clients where that makes sense—that's typically larger dollar amounts in terms of the account value. For clients that have smaller dollar amounts but want a fixed income allocation, we use fixed income ETFs.
ETF.com: What about ETF allocations?
Ware: On the ETF side, the turnover is even lower, because of course, part of the reason that we invest in ETFs is that inherent diversification. On the individual security side, there's more idiosyncratic risks, so we are making changes there. But again, the turnover in the portfolio is probably less than 20%. We're fairly static in terms of how we manage portfolios—we want to be long term investors.
On the equity side of the portfolio, we use a core- satellite approach, and that's really how the ETFs get into the mix. We have ETF-only portfolios for smaller clients—like less than $250,000—typically we use ETFs solely unless the client wants individual stocks. Then we'll customize the portfolio.