Expanding Opportunities. Increasing Access
As should be easy to see, we have been large supporters of the trend to Exchange Traded Funds (ETFs) from mutual funds. We have written about the lack most mutual funds have displayed in beating their respective benchmarks. With this announcement of Auour partnering with Mission Funds in launching our first mutual fund, the first question anyone should ask us is “are you changing your stripes?” The unequivocal answer is “Absolutely NO”.
Our mission from the start has been to provide investors a process striving to obtain the full potential of the public investment markets. Our process to obtain this objective has been to focus on what we believe to be the three most important aspects to reach the markets potential: market participation, asset allocation, and a focus on costs. We have been critical of the process most mutual funds follow; the thought they can beat the market by selecting a narrow group of stocks and omitting the larger universe available. That approach has been argued (“this is the year for stock pickers”) again and again, yet proven wrong. They have incurred high costs, paid by their shareholders, and have typically suffered underperformance.
Though the general thought is mutual funds are expensive relative to the other options, it does not have to be so. Of the various ways investors can gain access to the markets, each way provides a more or less efficient way. Not all shoes fit all feet.
Up until this point in Auour’s life, we have focused on processes for larger clients where separately managed accounts (SMAs) can be tuned to the needs of the client and costs incurred by the client are low relative to the funds invested. Unfortunately, SMAs do not fit all applications. What if a person has funds below our minimum? Are not able to get on the platforms we support? Have an overall strategy where we play only a supporting role (which is something we cannot comprehend)?
In these cases, utilizing our SMA platform may incur higher costs, hampering our mission. This changes with the launch of the Mission-Auour Family of risk managed portfolios. Now that we have demonstrated success in our SMA strategies, we thought it time to broaden our reach. Our partnership with Mission Funds, in being their flagship offering, strives to produce the economies of scale that mutual funds can produce. We will focus on delivering that economies of scale to our shareholders, following the admirable path pioneered by Vanguard.
Auour has a deep appreciation for our clients and will continue to act as humble stewards of their hard-earned savings, offering as many access points as possible.