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.  Portfolio Cafe models are designed to offer more robust performance than traditional passive, buy and hold approaches.  Many of the models are also designed to protect investor’s capital during market declines.

What are the advantages 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 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 Exchanged Traded Funds ("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 in any of the models?

Yes.  Some 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 management?

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 any changes made to the models.

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.

Are you are Registered Investment Advisor?

No.  Portfolio Cafe is not licensed to provide investment advice and everything within the site is for informational purposes only.  To see our full disclaimer, click here.

Do you offer managed accounts?

Fortier Financial, LLC which offers the Portfolio Cafe Advisor services is a money management firm providing services to both individuals and institutions.  Fortier Financial is a separate company from Folio Cafe, LLC who operates and maintains the Portfolio Cafe website.

Fortier Financial is an operating division of Capital Markets IQ, a SEC Registered Investment Advisor.  Investors who choose to open an account with Fortier Financial will have the opportunity to work directly with a financial advisor who is versed in Portfolio Cafe model strategies.  In addition, investors will receive a personal app that will allow them to track their investments and more.

Currently, custody of accounts is with Fidelity.

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