Here is how we compare to other asset managers*:
|Financial Advisor||Hedge Fund||World Wise Investments|
(average mutual fund fee)
|25-50% of profit||0.04%
|Total fee, %||up to 2.50%||>4%||0.98%|
|Total fee, $
|up to $25,000||>$40,000||$9,800|
|Speculation||Risk averse active
|Assets at risk (on avg)||100%||> 100%||< 60%|
|Risk Adjusted Returns||Poor||Very Poor||Excellent|
|Conflict of interest||Varies||Varies||None|
(basic financial planning)
|$200/hr||Not available||No charge|
Risk Adjusted ReturnsIt is not enough to say that your portfolio performed well. When one measures a portfolio's performance, one needs to also determine AT WHAT COST said performance was achieved. Or, how much risk was taken to achieve said performance. For example, a hedge fund may claim to have beaten your benchmark (say the S&P 500 index) by 5 or 10% last year. However, they may have accomplished that by levering up your portfolio two or three times it's value. Had their bet gone wrong, you could very quickly have lost more than half your wealth. This is betting, not investing. You might as well try your luck at the casino.
Meanwhile, you traditional investment advisor may have matched your benchmark; however, to do so, they had to risk 100% of your funds.
At World Wise Investments, we aim to match, and consistently beat, other advisors with less than 60% of your funds at risk! Therein lies the concept of “Risk Adjusted Returns”. It is a measure of how much of your money was put at risk in order to achieve desired returns. The higher the amount of funds at risk, the greater the risk of catastrophic and unrecoverable losses.
When we invest, we worry FIRST about how much we risk LOOSING and then count the prospective returns we COULD make. A gambler, MAY deliver similar returns but with 200-300% of your funds at risk. We will try to provide the same return, but with less than 60% of your funds at risk!
* Financial advisor and hedge fund fees indicated are industry averages.
** Advisory fee is industry average; Other fee may be lower for advisors investing in ETFs/stocks
*** World Wise Investments’ advisory fee based on average portfolio size of $1 million.