Global ETF Strategies

KCM offers various U.S. equity strategies. Depending upon the client’s needs, one or more such strategies will be selected for inclusion in the client’s global portfolio. KCM tends to employ Exchange Traded Fund (“ETF”) securities in its equity strategies.

However, not all of KCM’s strategies are ETF based. An example of a non- ETF based domestic strategy is our Large Cap Value Strategy which is composed of 40 individual company stocks selected from the Russell Large Cap Value Index.

Examples of U.S. oriented ETF based strategies include All Cap Multi Style ETF and Large Cap Core ETF. Typically the domestic portion of the client’s equity exposure would range from 70% to 90%. The remaining equity exposure would be devoted to foreign stocks.

Foreign stock exposure would be provided through KCM’s Emerging Markets ETF Strategy (“EMI”). KCM believes that the greater reward will accrue to investing in emerging, rather than established, foreign equity markets. Examples of countries included in KCM’s EMI strategy are China, South Africa, Malaysia, and Brazil. Typically emerging market stock exposure will be through the use of ETF securities and will be limited to a maximum of 30% of portfolio equity allocation.

Combining U.S. and foreign equities into a single portfolio is called a Global Equity-Only Account. It is also possible to add fixed income securities (ETFs, closed-end funds, and individual bonds and notes) to the portfolio and thereby create what we call a Global Balanced Account.

The asset mix for Global Balanced Accounts is determined on a client-by-client basis. As a long-term target, the range of equity exposure can be from 20% to 80% of the portfolio’s market value . Typically, KCM rebalances accounts to their long-term target asset mix quarterly.

KCM believes that its systematic, disciplined and consistent process limits risk, maintains appropriate diversification, and allows for risk appropriate capital appreciation. Turnover is relatively low and tax consequences are monitored in taxable accounts. KCM makes available its Global strategies in a single portfolio thereby removing the need for multiple managers and multiple accounts. Below is an example of a Global Blended Account.

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