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Frequently Asked Questions

What is Portfolio Cafe?

Portfolio Cafe is a website devoted to systematic, rules-based investing.  The site publishes Wealth models that utilize Exchange Traded Funds (ETFs) and Active Stock Strategies that invest in stocks.

Why was the site created?

To provide easy and affordable access to sophisticated investment models that are normally only available to institutions and hedge funds.

What is your investment philosophy?

We believe that downside risk management is one of the most important attributes to successful portfolio management.  Unfortunately it’s also one of the most misunderstood and neglected aspects of traditional portfolio management.   Our focus first and foremost is on managing strategies that will provide investors with capital preservation when they need it the most.  You can only spend positive returns!  To that end, our models are built to provide investors with superior risk to returns than traditional portfolio construction approaches.

What is the advantage of using models for investing?

Studies show that investors repeatedly underperform the market.  In 2014, Dalbar reported that the 20-year annualized S&P return was 9.85% while the 20-year annualized return for the average equity mutual fund investor was only 5.19%, a gap of 4.66%. The primary reason investors underperform is because of behavioral tendencies and human emotion.  Models eliminate these behavioral flaws by systematically applying the same rules in consistent and ongoing fashion.  Additionally models can be designed to exploit certain “edges” or “factors” that have demonstrated over many years to produce above average returns.   

What is a “model” and how many securities are in a typical Portfolio Cafe model?

A model is a group of securities that have been screened and ranked from a much larger universe of securities that share attributes deemed favorable for achieving above average market returns.  

Morningstar defines ETF Managed Portfolios as “investment strategies that typically have more than 50% of portfolio assets invested in exchange-traded funds…” At Portfolio Cafe, our Wealth Strategies are 100% invested in exchange-traded funds, or sometimes cash if you invest in our risk-managed portfolios that offer downside protection.

When market risks are low (known as a “risk on” environment), our ETF Wealth Strategies are typically positioned for growth. When market risk is medium, our portfolios might invest in more stable or undervalued areas. The risk-managed portfolios could also have a higher percentage of cash. When market risk is high (“risk off”), we tend to get defensive. Portfolio Cafe’s risk-managed portfolios can go up to 100% cash in extreme conditions.

Portfolio Cafe’s specialty Wealth Strategies  ETF models will typically hold 2-3 ETFs and the Active Trader Strategies will typically hold between 10 and 20 stocks at a given time.   Our Keystone Wealth Strategy, designed as a complete portfolio offering will hold up to 12 ETFs.   

How often are the models updated?

Wealth Strategy ETF models are updated on the first trading day of every month and the Active Trader Strategies are updated every Monday before the NYSE open.

What are the advantages of ETFs?

Exchange Traded Funds (ETFs) make it easy for any investor to own any asset-class with a single purchase.  ETFs offer lower operating costs than traditional open-end funds, flexible trading, greater transparency, and better tax efficiency in taxable accounts.  

Does Portfolio Cafe use inverse ETFs?

Yes.  Most of the Portfolio Cafe ETF models include an inverse fund specific to the asset-class, e.g. a model investing in US stocks would include a -1X beta S&P 500 ETF.  There are occasional periods in the market where it may be profitable to own an inverse ETF and benefit from a declining market.  Portfolio Cafe does not use leveraged inverse ETFs.  It is through the judicious use of inverse ETFs and cash that allows Portfolio Cafe models to offer investors downside risk protection.

What is Tactical Asset Managment?

Tactical Asset Management is an approach to managing money that can go to 100% cash or may potentially make money whether the stock market goes up or down.  Our tactical decisions are 100% rules-based and are not subject to human emotion or subjective inference. 

How do I find out about changes made to the portfolios?

We announce new updates to the Wealth Strategies via the Members dashboard before the NYSE open on the first trading day of the new month.
Our Active Stock Strategies are updated automatically each Monday, generally a few hours before the NYSE open.  Members can access the updates via the Members dashboard.

Can I have you manage my money for me?

Yes.  Portfolio Cafe has partnered with QuantAdvisors, Inc., a SEC Registered Investment Advisor.  There, you can establish an account and QuantAdvisor will trade any of our strategies on your behalf for a low, all inclusive fee annual fee of .75%. 

Do you offer a trial membership?

Portfolio Cafe offers a Free Membership which grants access to the Members dashboard. From here you will have access to our white-paper library, a free model, and other resources.

Phone:  888-963-8915

Email:  info@portfoliocafe.com