With this month’s launch of Beacon’s new Vantage 3.0 American Portfolios, we are excited to see many advisors taking advantage of our latest addition. Let’s take a look at some key highlights, advisor questions and where these portfolios fit into our investment offerings:
Two Lines of Defense
Beacon portfolios are typically built with two lines of defense at their foundation—equal sector allocation and stop-loss protection. These layers offer insulation from diversifiable risk and extreme market volatility; however, when avoiding overexposure to market bubble conditions in favor of asset preservation, the equal sector allocation can cause performance to lag behind benchmarks such as the S&P 500 in sector-heavy markets. While protection of assets will remain an integral philosophy in the portfolios at Beacon, we recognized a need for a more aggressive strategy in our line-up to offer a broader spectrum of investment solutions for our advisors to choose from, which is where our new 3.0 American Portfolios come into play.
+ American Funds – Performance Focus
With Vantage 3.0 American Portfolios, we have created an option that trades in the first line of defense of equal allocation in exchange for access to the esteemed investment committees of American Funds that back and proactively manage each of their mutual funds. This strategy allows for performance that is more aggressive and competitive with the S&P 500, especially in a year like 2017 where a few sectors drove the overall market performance.
+ With Added Protection from 3.0 Stop-Loss Mechanics
Adding to the credibility and track record of American Funds, our Vantage 3.0 Portfolios introduce a layer of risk management to investors through our 3.0 stop-loss mechanics. (For more on the mechanics of the stop-loss protections in place for Beacon 3.0 portfolios, download our client one-pager “How Do Vantage 3.0 Portfolios Work.”) Here again, rather than operating at the sector level like our existing 3.0 portfolios, the individual American Funds within the new portfolios will be bought and sold using the same mechanical management process, allowing for maximum market participation while mitigating catastrophic losses.
+ New International & Domestic Diversification Options
Based on the feedback we have received from advisors, the Vantage 3.0 American Portfolios also fill a role of introducing a new option for diversification: domestic and international portfolios. The American Funds are much more cap-weighted than our equal sector Vantage portfolios. This strategy allows for more exposure to the big sectors such as technology, financials and healthcare and less exposure to some of the smaller sectors such as utilities and real estate. These new portfolios can layer seamlessly with each other as well as our existing Vantage 2.0 and 3.0 portfolios to create even more flexibility and design control for the assets that you manage.
+ Institutional Fee Structure & Seamless Transitions
While the American Fund products are well-known and widely used within our industry, the Vantage 3.0 American Portfolios provide privileged access to institutional rates through F3 share funds, cutting internal expenses roughly in half from the retail A share funds. Additionally, through the use of interclass exchanges, you can easily transition existing shares over to this new platform without triggering a taxable event.
Now, instead of going to a client and saying, “We’ve got something different or better for you,” you can say, “We’re going to keep using an American Funds portfolio, but we’re going to add a benefit to it, a risk management element.” This will allow you to go to the client with an extra benefit, rather than a change. And, with increasing legislation and scrutiny of 12b1 fees, this provides a significant opportunity to easily introduce an ongoing value that helps justify the transition to an ongoing AUM fee structure to your clients!
Download Vantage 3.0 American Fund Fact Sheets
To learn more about how you can incorporate Vantage 3.0 American Portfolios into your practice, contact your wholesaler today!