Sophisticated Investment Management

Sophisticated Investment Management

STATES OF THE WΩRLD WEALTH MANAGEMENT® is our trademarked proprietary investment approach of managing assets based on possible outcomes rather than attempting to predict particular outcomes of financial markets. To do this, we allocate a client’s holdings across different assets that have returns tied explicitly to different states (i.e., possible outcomes) of the financial world.

For example, we have a strategy designed to survive precipitous market drops (i.e., PRΩTECTED VALUE™),  another to earn modest returns during flat market periods (i.e., TΩTAL RETURN®), and another to thrive during strong market return periods (i.e., DIFFUSSIΩN™). Our wealth management services are thus in sharp contrast to the conventional approach of simply assuming some return across assets and holding a static asset allocation of various traditional investments (e.g., some mix of US stocks, US bonds, and International stocks).

For many cases, it is also helpful to utilize alternative investments, including real estate, private equity, and private credit. These opportunities can help further improve the risk/ return potential of portfolios. However, certain net worth requirements must be met for accessing these types of investments, typically ranging from $1,000,000 to $20,000,000 (not including a personal residence), depending on the type of investor.

Ultimately, our approach is to prepare rather than predict by using a sophisticated mix of investments and assets. To this end, we help our clients identify what we have dubbed a Corridor of Comforttm, so that they can enjoy peace of mind during their financial journey.

To find out more about our unique approach

PRΩTECTED VALUE™

A critical component of our wealth management services is a strategy named PRΩTECTED VALUE™ designed to protect a portfolio during steep declines in the stock market. We use call options and short term debt instruments to create a loss floor on a portfolio, typically targeted, depending on the client, in the 0%-15% range. On the upside, we target a capture of 40-60% of the positive return. The name of the strategy is derived from the mathematical concept of absolute value—converting some of the negative values into positive ones while still maintaining the sign of positive values.

TΩTAL RETURN®

An important offering in our wealth management services is a strategy named TΩTAL RETURN® designed to garner modest returns in those environments where stocks have roughly a zero return. This is accomplished through a proprietary covered put and covered call writing strategy on the SP500 stock market index. The ratio of puts and calls changes dynamically, depending on market sentiment. Thus, returns and losses are muted but income is enhanced. Clients potentially earn modest returns, which are targeted at 4-6% per annum, during zero return stock market environments—hence, the strategy name TΩTAL RETURN®.

DIFFUSIΩN™

Our wealth management services include a proprietary strategy named DIFFUSIΩN™, which creates an investment that tends to fall in-line with the stock market when it falls in value, but tends to increase at a greater rate when the stock market increases in value. In particular, the strategy is a unique blend of short-term investments and smaller capitalization equity investments. This creates a “barbell” of risk that yields a similar overall risk to the stock market but with improved upside. Thus, the positive returns become more diffuse, as the name DIFFUSIΩN™ suggests.

ENGINEERED INDEXING™

Commonly, Indexing means investing in such a way to replicate the returns of a basket of investments. Often this basket of investments represents some popular index such as the SP500, which tracks roughly the 500 largest US publicly held companies. At Omega, we take a different approach in our indexing. Academic research, as well as proprietary research by Omega, have shown that various modifications of typical indexes can provide potentially greater risk-adjusted returns over the long-term. For example, adding additional exposure to value and small capitalization factors can increase long-run return. Similarly, our proprietary strategies of TΩTAL RETURN® and PRΩTECTED VALUE™ are further examples. Hence, ENGINEERED INDEXING™ describes our creating and utilizing indexes designed to capture more attractive risk and/ or return potential characteristics than the unaltered indexes.