By Jeremy Schwartz, CFA, Executive Vice President, Global Head of Research, WisdomTree
In a recent “Behind the Markets” podcast, we welcomed Phil Huber (@bpsandpieces), CIO of Huber Financial Advisors, a financial planning firm based in Chicago. Huber was the eighth employee when he joined the business in 2008, and the firm had about $300 million of client assets under management. Today, the firm has 25 employees and approximately $1.5 billion under management.
Huber Financial Advisors takes pride in being a family business serving families. That culture and mindset guide the firm’s approach to servicing clients.
We spoke about Huber’s journey from observer of finance Twitter and the popular blogs by Josh Brown (@ReformedBroker) and Ben Carlson (@awealthofcos) to how he eventually joined the “fintwit”—financial Twitter—conversation. He set out by creating a blog, and his first post was a compilation of insight from people he respected. He asked them who was on their Mount Rushmore of investors, and their network of readers helped his blog make a splash.
Huber is active on Twitter. I asked whether he believes this helps to attract clients or whether it’s really just to become smarter and better at his day job. Huber interacts with few of his actual clients on Twitter.
Rather, he sees the platform as a way to expand his network and engage in great conversations that push him to be a better financial advisor and investor.
14 Principles
Of the 14 principles that his firm follows, Huber’s favorite one is a phrase: “Shades of gray.” Many people view the world as being black and white—active versus passive investing—and Huber keeps a healthy balance and blends elements in a middle shades-of-gray zone.
On the bond side of the firm’s portfolio, Huber embraces predominantly active managers, while on equities he employs a combination of solutions with factor-oriented strategies like what WisdomTree, Dimensional Fund Advisors and iShares offer.
Alternatives
We spoke about how Huber likes to use alternatives for their diversifying characteristics, and how they are uncorrelated with stocks and bonds—but that doesn’t mean they will always go up. Huber’s goal is for his clients to sleep well at night, even if portfolios are sub-optimized.
60/40
Huber does not think there is a right answer for how much of a portfolio should be foreign equities, and while the global market cap is close to approximately 55/45 U.S./foreign, Huber tends to be more global than many advisors.
Emerging Markets
From an expectation perspective, Huber looks favorably on emerging markets today, and while he cannot predict that 2019 will be the year that the over-weights or newly established positions will pay off, he thinks the relatively low valuations warrant new allocations.
Fixed Income?
Huber finds active managers have outperformed more with core bond managers than with core equity managers.
He ascribes this to lower-fee differences between active and passive bond managers, but he also quoted a paper from PIMCO that examined a greater presence of non-economic participants in the bond market, on which active managers capitalize.
Embracing Alternatives
Huber’s firm embraces alternatives in their portfolios—the average client has as much as 20% in alternatives—for their diversifying characteristics and low correlations with traditional stocks and bonds. While only 20% of portfolios, this category generates 80% of questions, particularly around expenses. One year is not going to change Huber’s take on these strategies as he believes risk-premiums are bound to have bad years.
As he points out, risk premiums generate returns due to their risk.
Huber talked favorably about trend-following and managed-futures strategies, risk-premiums-style investing and re-insurance. The most important element of including alternatives is how much education Huber feels advisors must do when including these strategies.
Please listen to our full conversation with Huber below.
Versions of this article first appeared on the WisdomTree blog and SeekingAlpha on January 29, 2019.
Photo Credit: Juan Antonio Segal via Flickr Creative Commons
Disclosure: Certain of the information contained in this article is based upon forward-looking statements, information and opinions, including descriptions of anticipated market changes and expectations of future activity. WisdomTree believes that such statements, information, and opinions are based upon reasonable estimates and assumptions. However, forward-looking statements, information and opinions are inherently uncertain and actual events or results may differ materially from those reflected in the forward-looking statements. Therefore, undue reliance should not be placed on such forward-looking statements, information and opinions.
About the Author: Jeremy Schwartz, CFA, Director of Research, WisdomTree Asset Management is responsible for the WisdomTree equity index construction process and oversees research across the WisdomTree family. Prior to joining WisdomTree, Jeremy was Professor Jeremy Siegel’s head research assistant and helped with the research and writing of Stocks for the Long Run and The Future for Investors. He is also co-author of the Financial Analysts Journal paper “What Happened to the Original Stocks in the S&P 500?” Jeremy is a graduate of The Wharton School of the University of Pennsylvania and currently stays involved with Wharton by hosting the Wharton Business Radio program “Behind the Markets” on SiriusXM 111.
