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Election 2016: Accomplishing Returns in Today’s Market

Posted on October 14, 2016

(This is the transcript of a video interview with Robin Tull on October 12, 2016.  Click here to watch.)

Q:  How can a prudent investor manage returns in a zero interest rate environment?

Robin Tull:  I attended a financial planning conference in Baltimore recently where I joined a session called “How to Navigate Retirement in a Zero Interest Rate Environment.” It’s safe to say that most investors – not just retirees – are looking to increase the yields on their investments. Since the great recession of 2008, many central banks around the world have instituted a very aggressive monetary policy of keeping interest rates low. It remains to be seen whether this was a good policy or not. Low interest rates seem to have hurt average savers the most who, when faced with very low – almost no – returns from more conservative investments like bonds and cash, were forced to move into riskier investments. So what was normal in recent years changed because of the lack of attractive investment alternatives thanks to this very aggressive central bank policy.  Because of this, we continue to view investment yields as an ongoing challenge for value-oriented, long-term prudent investors.

Q:  What are other factors affecting positive returns?

But it’s not just the low interest rates challenging returns. There’s a popular book out entitled “The Incredible Shrinking Alpha."  We use the term Alpha to describe the excess returns of a fund relative to the return of a benchmark index. The author states his belief that excess returns are being reduced because:

  • Competition is getting better
  • Expenses relative to investment returns are higher
  • And the supply of dollars chasing Alpha is growing

What this means is, in this market cycle, many active fund managers have underperformed their comparable index funds because competition is improving among active managers and, generally, expenses have not come down.

Q:  So what's an investor to do?

Robin Tull:  As with any market cycle, we will continue to stick to the discipline of our long-term fundamentals, and not get caught-up in the daily noise of the news cycle. We believe it is crucial to avoid the popular temptations of “fad” investments, as well as the emotional temptations of greed and fear, which can be warning signs during investment decision making. With all of this in mind, we at Tull Financial are developing plans to further refine our investment management strategy in 2017:

  • We will continue moving towards a combination of actively managed funds alongside index funds which we initiated earlier this year
  • We will continue to seek out funds with low expense ratios
  • And we will simplify our allocation strategies, by reducing the number of funds.

We are grounded in our value-driven approach that relies on the fair value of an investment being recognized over time. This, of course, takes patience in a very uncertain world. We have served our clients for over 30 years with excellence and integrity, and we have confidence that we will continue to provide our clients with the navigation and the discipline essential for an increasingly complex global economy.

Q:  How much do elections matter?

Robin Tull:  This year’s presidential race has generated more interest, concern, and questions from clients than any we can remember. Some people want to know how the election impacts our investment views and analysis, and how we might adjust our positioning in anticipation.

First and foremost, we don’t bet on outcomes.  Instead we maintain an investment discipline that is long-term in focus, based on analyzing valuations and fundamentals, which seek to limit downside risk, regardless of market or election cycles. Whether election driven or otherwise, we deal with uncertainty by not making sudden moves in or out of markets based on headlines. Instead, we attempt to develop and assess a range of scenarios, then construct diversified portfolios that are positioned to meet our clients’ longer-term goals, while minimizing the impact of temporary market falls. While elections do matter, not letting anxiety drive your decisions matters even more.



Tull Financial Group, Inc. is a registered investment advisor. For more information, please visit or request a copy of the firm’s disclosure brochure. Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that the future performance of any specific investment, investment strategy (including the investments and/or investment strategies recommended by the adviser), will be profitable or equal to past performance levels.  This material is intended to be educational in nature, and not as a recommendation of any particular strategy, approach, product or concept for any particular client.  These materials are not intended as any form of substitute for individualized investment advice.  The discussion is general in nature, and therefore not intended to recommend or endorse any asset class, security, or technical aspect of any security for the purpose of allowing a reader to use the approach on their own.  Before participating in any investment program or making any investment, clients as well as all other readers are encouraged to consult with their own professional advisers, including investment advisers and tax advisors.  Tull Financial Group can assist in determining a suitable investment approach for a given individual, which may or may not closely resemble the strategies outlined herein. Certain material in this video is proprietary to and copyrighted by Litman Gregory Analytics and is used with permission. This blog article is provided for general information only, and nothing contained in the material constitutes a recommendation for purchase or sale of any security, or investment advisory services. Reproduction of this material is prohibited, and all rights are reserved. Read the full Disclosure.

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