Windham Launches Tactical Portfolio Using ETFs

 

Windham Capital Management has launched a tactical allocation portfolio that will use proprietary risk measures to control exposure through various different market cycles.

The managers of the Windham Tactical Portfolio will monitor the Windham Investment Risk Cycle daily to adjust the investment mix to grow principal during low-risk markets and preserve principal when there is higher risk. The portfolio managers will use exchange-traded funds as the underlying investments. The Boston-based firm has been serving institutional investors for 22 years, but is marketing its new strategy to high-net-worth clients and smaller institutions.

Although the Windham Tactical Portfolio is not entirely the same to what the firm offers its institutional clients, “the methodology and many of the inputs are identical,” said Lucas Turton, managing partner and chief investment officer at Windham.

“For 22 years we had only been working with institutional investors but with the recent proliferation of ETFs we can now deliver similar strategies to individual investors through their planners and advisors,” he added. “It makes a lot of sense from a transparency perspective and for managing fees.”

Turton said that when portfolio managers are monitoring the investment risk cycle they are looking for unusual price movements, assets becoming highly correlated, or correlated assets becoming decoupled. Windham managers are also monitoring for systemic risks—periods when any outside shock can have a major impact and cause contagion in a sell off.

“After 2008 advisors have been looking for products that have better risk controls built in and can tactically shift assets for their clients,” Turton said. “There are those individual investors that are fearful of sitting on the sidelines and want some participation, but not the risk.”

Besides being money managers, Windham Capital Management is also a global provider of technology and software. The firm has developed an online tool to build investment portfolios and generate an investment policy statement.

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