Formula Investing SMA Transition

Formula Investing SMA Transition

December 4, 2013 Value Investing Research
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(Last Updated On: December 3, 2013)

Dear Readers:

Joel Greenblatt has attracted a lot of followers based on the success of his book, “The Little Book that Beats the Market,” and the “Magic Formula” strategy it describes. The Magic Formula is a compelling concept and a promising strategy. Mr. Greenblatt even launched Formula Investing, which provides investors an easy way to invest in the Magic Formula strategy, via mutual funds and separately managed accounts (SMAs).

We believe, however, that changes are afoot over at Formula Investing. We’ve become aware, through various inquiries, that Formula Investing will no longer be offering their systematic value strategy in an SMA format. This is an unwelcome reality for many investors, because the performance for the “Magic Formula” has been nothing short of magic this year.

We understand that it may be necessary for Formula Investing to transition SMA accounts into their mutual fund platform. And we encourage you to pursue this option if it is the best fit for your situation. However, if you are an investor that prefers a seperately managed account, we can facilitate.

Via our investment advisory firm focused on empirical-based arbitrage (Empiritrage), we offer investment advisory services and a common sense approach to value investing via SMAs. Our Empiritrage Quantitative Value (EQV) approach is based on my book, Quantitative Value. The mission of EQV is to systematically execute a value investment philosophy.

If you are currently a Formula Investing client that wants to maintain an SMA structure, we would be happy to speak with you as you conduct your year-end investment planning.

You can contact us here.

Semper Fidelis,

Wes

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Information on the EQV strategy can be found via the following link:

https://www.dropbox.com/s/3klne77t2epna02/EQV_Short_v01.pdf?dl=1

The performance data shown in the presentation above represent past performance, which is not a guarantee of future results. Investment returns and principal value will fluctuate, so that investors’ shares, when sold, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data cited…


Note: This site provides NO information on our value investing ETFs or our momentum investing ETFs. Please refer to this site.


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Please remember that past performance is not an indicator of future results. Please read our full disclosures. The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Alpha Architect, its affiliates or its employees. This material has been provided to you solely for information and educational purposes and does not constitute an offer or solicitation of an offer or any advice or recommendation to purchase any securities or other financial instruments and may not be construed as such. The factual information set forth herein has been obtained or derived from sources believed by the author and Alpha Architect to be reliable but it is not necessarily all-inclusive and is not guaranteed as to its accuracy and is not to be regarded as a representation or warranty, express or implied, as to the information’s accuracy or completeness, nor should the attached information serve as the basis of any investment decision. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission from Alpha Architect.


Definitions of common statistics used in our analysis are available here (towards the bottom)




About the Author

Wesley R. Gray, Ph.D.

After serving as a Captain in the United States Marine Corps, Dr. Gray earned a PhD, and worked as a finance professor at Drexel University. Dr. Gray’s interest in bridging the research gap between academia and industry led him to found Alpha Architect, an asset management that delivers affordable active exposures for tax-sensitive investors. Dr. Gray has published four books and a number of academic articles. Wes is a regular contributor to multiple industry outlets, to include the following: Wall Street Journal, Forbes, ETF.com, and the CFA Institute. Dr. Gray earned an MBA and a PhD in finance from the University of Chicago and graduated magna cum laude with a BS from The Wharton School of the University of Pennsylvania.


  • Hopefully, pretty close. Details will follow in a prospectus…still 9 months+ away.