Mission Wealth’s Osborne On ETF Investments And Market Efficiency

Kieran Osborne, CIO at Mission Wealth, joined Keith Black, Managing Director of RIA Channel, to discuss how the firm implements its investment strategy using ETFs.

With $7.07 billion in firm assets and $2.58 billion in ETF assets as of March 31, 2024, Mission Wealth ranks #46 in RIA Channel’s list of the Top 50 ETF Power Users.  By the end of August 2024, assets held by Mission Wealth’s clients had increased to over $9 billion.

Mission Wealth is an RIA offering comprehensive, unbiased wealth management services for a wide range of clients, including retirees and pre-retirees, family offices, business owners, foundations, and non-profit organizations.  In addition to its core holdings in ETFs, the firm offers access to alternative investments. As a comprehensive firm, it offers investment and estate planning services, in-house tax specialists, risk management, and philanthropic support.

Osborne and his investment team are in charge of building and trading model portfolios, researching funds and the macroeconomic environment, and performance reporting. As a core component of the allocation process, ETFs are held in both equity and fixed-income allocations.  ETFs play three roles in the portfolio: preferred default option, transaction-cost free trading option, or as substitutes for ETFs in the tax loss harvesting process.

Many markets are efficiently priced, as the data shows that the average active mutual fund underperforms its benchmark in many investment objectives.  Osborne notes that past performance is not indicative of future results, as many of the top-performing active funds in one period underperform in future periods. In the most efficient markets, such as US large-cap stocks, Mission seeks out the lowest-cost indexed ETFs in each investment objective that provide the required liquidity.  In addition to low costs, other important factors in the due diligence process for ETFs include its holdings and tracking error relative to the desired benchmark, the reputation of the asset management firm, and the asset size and trading volume of the fund.

Resources:

RIA Channel Top 50 ETF Power Users Ranking

Behavioral Finance and the Psychology of Wealth

Concentrated Stock Planning Services