Performance Fee

Pure Portfolios believes advisors’ incentives need to promote prudent wealth management. Therefore, if Pure does not meet its set hurdle rate (which will depend on the client’s investment objective) fees will be reduced by 25% for the next calendar year.

By connecting our management fees with investment outcomes, we get back to the fundamental reason clients hire a wealth manager; growing their wealth.

Note: Pure does not take an additional fee for upside performance.

Evidence Based Investing

Pure Portfolios adheres to Evidence-Based Investing principles. We define Evidence-Based Investing as the relentless pursuit of what works. We are interested in facts, not a narrative.

 

As Evidence-Based Investors, we believe:

  • Low cost investing can result in higher returns

  • Tax efficiency can boost returns

  • Active management has a place in portfolios, but paying a premium for the hope of outperformance does not work

  • Adopting a rules-based approach to investment management can reduce human bias

  • Incentives drive human behavior

  • Fee structures should encourage prudent wealth management

 

Evidence-Based Investing is a passion for learning, improving, and optimizing our process.

Portfolio Construction

Pure Portfolios utilizes an asset allocation framework using exchange traded funds (ETFs) to build core positions. We add factor screens based on valuation and future expectations. Factor tilts could include exposure to small cap, momentum, value, low-volatility, and profitability.

We reserve 10% of the asset allocation to express our active themes and adjust total portfolio risk. For example, if we are looking to reduce risk an allocation to U.S. Treasuries would be appropriate. If we were looking to add risk, an allocation to emerging market technology companies would make sense.

Our approach can be simplified as Core Beta + Factors + Thematic.

Ongoing Portfolio Management

In addition to keeping portfolios in-line with target allocations, we also:

  • Stress portfolios for adverse market environments to understand risk exposures and ranges of possible outcomes.

  • Run cross-asset correlation reports to better understand how our holdings move in relation to each other. These relationships change over time, especially during times of market stress.

  • Track standard deviation across all of our models and client accounts. This helps us provide context to our performance information.

  • Enable clients to easily access net of fee performance via the Pure online client portal and Pure client app.

We believe writing our own original research, blog content, and capital market commentary makes us better investors. In our opinion, advisors that parrot their firm’s top of the house thinking will never evolve as competitive thinkers or professional investors.

Cost of Investing

Pure Portfolios believes the “all-in” cost of investment management is too high, directly resulting in lower returns for investors.

Introducing Drive-Zero Investing.

Our effort to drive the cost of owning assets to zero. We do this by "in-sourcing" the investment management. We do not allocate client assets to third party managers, mutual funds, or other outsourced solutions. We build portfolios using low cost ETFs (Vanguard, Schwab, iShares), individual equities and fixed income. This lowers the cost of investing, provides greater tax efficiency, and we know precisely what we own.

Investing With Pure