Why This Company Only Invests In ETFs

What makes Efficient Market Advisors different from other asset allocation services is that it manages portfolios of only exchange-traded funds.

“It’s made Efficient Market Advisors a unique money manager since we launched in 2004,” CEO Herb Morgan told Benzinga.

He recently joined Benzinga’s #PreMarket Prep to talk about why the company only invests in ETFs.

Morgan started by explaining that Efficient Market Advisors doesn’t buy any single stock, and thus, it isn't exposed to single-stock risk.

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“We want to be measured, we want to be hired and we want to be fired on our asset allocation ability,” he said.

Morgan explained that the company wants to be measured on its decisions of what asset class to invest in, which is why there is such a meticulous process surrounding it.

Efficient Market Advisors first starts building a portfolio with a strategic asset allocation model. Then, a five-person investment committee makes tactical decisions to “overweight, underweight or eliminate sectors, industries countries [or] regions.”

Next, the team creates a broad portfolio that includes deep fundamental macro analysis using economic data that's released on a daily basis, Morgan said.

“Then we make those decisions and we implement all those decisions using ETFs,” he said.

Check out Morgan’s full interview here:

Don’t forget to tune in to Benzinga’s #PreMarket Prep broadcast Monday-Friday 8-9:45 a.m. ET for a live, interactive morning show with veteran traders and featured finance industry experts ready to answer your questions for the trading day.