We serve two primary markets: 1) retail and high net worth investors, and 2) professional service firms and their principals, endowments, foundations, charitable organizations, business entities and labor unions.
We emphasize personal relationships. Our clients are treated like family – we want each client to be successful. We conduct Zoom interviews with clients and discuss their portfolios with them regularly. We respect and like our clients.
Leppla Capital invests for Clients in accordance with the following principles:
We offer “best-in-class” investments in each of these sectors.
Leppla Capital’s principals have analyzed the universe of ETFs and selected 46 top rated equity and fixed income ETFs across the spectrum of asset classes. Subscribers can choose to invest in individual ETFs or use the selected funds to construct diversified portfolios customized to their individual goals and risk tolerance. And, for those who are interested in a “turn-key” solution, we provide Model Portfolios based on risk tolerance that investors can implement in their accounts as designed by Leppla Capital.
The Leppla Capital funds are almost all Morningstar 4 or 5 rated with low fees relative to the market, and all have consistently performed in the top half or better of their asset class.
Perhaps most significantly, we “benchmark” the performance of our portfolios with analogous Morningstar portfolios. For example, we compare the Leppla Capital “Moderately Aggressive” portfolio with a Morningstar portfolio comprised of Morningstar similarly rated funds. We provide this comparison to subscribers on a quarterly basis. This gives the retail investor the opportunity to see what the professional fund manager sees – that is, exactly how his Manager’s investments have performed compared to industry benchmarks. To our knowledge this is a unique attribute of the Leppla Capital approach.
The Subscription Service offers, in our view, “best-in-class” investments in all areas of securities investing.
We are different from services offered by Schwab, Fidelity, Vanguard and similar firms in that these firms believe, understandably, that their “in-house” offerings are the best. We respectfully disagree – we believe each firm has solid products, but further research and analysis is needed to determine which offering of many possible selections is optimal for the applicable asset class. As a result we subscribe to a number of research vehicles; e.g., Morningstar, Schwab, TD Ameritrade, Vanguard, Fidelity; including our own research, to offer our advice.
We also differ from so-called “Robo” advisors in that our recommendations are not computer driven pursuant to models or algorithms, but are made real time by human beings. While we take advantage of technology, we are nimble and responsive to “event driven” market fluctuations in a way that a robo-driven program cannot be.
By way of example, here is a description of one of our 7 core portfolios, the Moderately Aggressive Portfolio:
Leppla Capital has constructed a Moderately Aggressive Portfolio comprised of 46 top rated equity and fixed income ETFs across the spectrum of asset classes. Compared to the Morningstar market benchmark, this portfolio has less expected volatility and higher expected returns. It is constructed of low-cost ETFs, which results in higher net returns and more money to reinvest, leading to higher returns. The proprietary methodology utilized by Leppla optimizes the diversification of the portfolio in terms of equity and fixed income, domestic and foreign, and value and growth. In addition, we have factored in holdings across industries and selected government, corporate, and muni bonds, as well as convertible instruments, preferred stock and real estate holdings. The highly diversified fund is engineered to capture the best of what the market has to offer for clients whose “risk tolerance” suggests that this is the portfolio to deploy.
Leppla Capital’s principals trade daily for our own accounts in the U.S. securities and options markets. We believe that retail investors can profit from a disciplined approach to investing, along with regular, ongoing investment education. We offer a methodical process that removes emotional decision making. We are students of behavioral traps that reduce success, and help our Subscribers learn how to avoid them. That is what our Subscription Service offers on a regular basis and for a very reasonable fee.
We start by recommending for each Subscriber a Model Portfolio comprised of the traditional equity security asset classes. Our recommendations are based on quantitative analysis and the ETFs or mutual funds we choose are liquid and transparent as to their holdings.
But these are only the first of our recommendations. To this core set of positions we add recommended investments in S&P sector funds, so-called “factor” funds, “special purpose” or “opportunistic” funds, direct investments in equity securities (e.g., Apple, Netflix, emerging growth companies, high dividend paying, relatively safe individual equities, etc.), and other types of investments. For sophisticated investors we offer hedging strategies through ETF investments that are 1X against the market as well as put/call options strategies.
Our typical Subscriber wants to manage his/her own portfolio, but would like to see periodic investment recommendations based on Leppla Capital’s fundamental and technical analysis of the markets and individual investment securities positions within those markets.
Recommendations are made for two primary forms of accounts: either 1) taxable or 2) tax free or “qualified” accounts; e.g., IRA or other defined contribution types of accounts. We do not recommend highly active trading for either type of account, but our taxable account recommendations tend to have longer holding periods and are designed with tax efficiency in mind.
Ours is a serious service where we seek long term accumulation of wealth through slow, steady, thoughtful market activity. We believe this is the only “tried and true way” to be successful. As Warren Buffet has said, “Money flows to the patient investor.”
We abhor subscription services that are “get rich quick” schemes, or have urgent “you must act now” demands, or promise to recommend the latest, best equity in a particular market segment; e.g., 5G or other technology stocks. In our experience these services are, more often than not, disappointing and temporal. This is Not who we are, what we do or what the Subscription Service offers.
We believe that an informed investor is a better investor. As described under Individual Investment Services, [insert link], we provide Subscribers with ongoing education in the areas of fundamental and technical market analysis. Fundamental analysis, for example, will include education on the potential impact on the markets of factors such as fiscal policy, monetary policy, employment numbers, inflation/deflation indices, geopolitical and/or “event-driven” factors, tax policy, analysis of where the economy is in the context of the then current business cycle, and similar factors. Technical education will include securities price and volume movements, market charting and similar tools.
We communicate regularly with our Subscribers through email. Email notices are sent to Subscribers whenever we make a new or different investment recommendation. The educational component of the service is delivered through email messaging, Zoom Meetings, “White Papers,” webinars and similar communication methods. We respect Subscriber privacy. We do not share Subscriber information in any manner with any third party.
For Subscribers who enroll in 2020: $48/month, 6 months payable in advance. The service is free after enrollment until the first day of the following month. The service is automatically renewable thereafter at the same price in 6 month periods, with no price increases ever for our 2020 Subscribers. Subscribers can discontinue by notifying us by email 30 days before the end of any 6-month period.
Subscribers enroll in the service by emailing firstname.lastname@example.org. Payment is made through the secure PayPal portal.
We begin with an allocation to traditional asset class investments. Depending on the subscriber’s choices, this foundational portfolio can vary as a percentage of total investment allocation.
Traditional asset class portfolios using our own array of high value add, low expense ratio mutual funds and ETFs are organized as follows:
One of the questions we are often asked is “Do you use passive or active funds?”
First, a definition: A passive fund tracks an index (e.g., the S&P 500 equity index, or the Russell 1000 index), with the goal of having the same investments in the same weightings as they are in the market for that particular index. To the extent there is variation this is called the “tracking error.”
An active fund, by contrast, is one in which the individual securities selections are made by the investment managers. The promise, or at least expectation, of an active fund tis that the active fund managers can “beat the market,” in effect providing alpha (higher) returns than the market is providing (called beta returns). Numerous studies have shown that, only from time to time and not consistently, do actively managed funds outperform the market.
We prefer passive strategies in efficient markets due to low fees and the tendency of active managers to lag (fall behind) their relevant benchmarks over time. We may use active management when there is not an investable benchmark; for example, real estate, absolute return funds, private equity, and so forth. Or, for example, if there is a compelling investment hypothesis (called a “story”) or a market condition that makes a tactical play in active management likely to succeed over the medium term.
The S&P 500 Index, which is the general securities market barometer, is divided into 11 separate sectors, as follows:
Consumer Discretionary (e.g., Louis Vuitton, high fashion retail)
Leppla Capital follows price and movement trends to identify S&P sectors that should be over-weighted, under-weighted or weighted at peer averages. We provide our Subscribers with this information and recommended ETFs or mutual funds in each sector. As the economy rolls forward these sector allocations will vary over time. Subscribers have the benefit of our analysis and recommendations in constructing their own portfolios.
We use S&P Dow Jones Reports to summarize Monthly, Quarterly and Year-To-Date performance in each of the 11 S&P Sectors. We also use rolling 10 year averages to show the average annual returns, and the best and worst performance periods. A recent example follows:
We evaluate these and similar strategies, many of which have become part of lay investor parlance. Our overall philosophy is to look for investments where the manager can actually (and consistently) add alpha, and is it true alpha, or is the manager simply taking more risk than the benchmark?
In this context the primary factors that “factor funds” weight are value, small or micro-cap companies, momentum, low volatility and quality (which often means dividend paying companies). A sixth factor, yield, is sometimes included in the main factor definition count. Thus, in steeply rising or falling markets, one might make a short-term investment in a “momentum” factor fund.
In our experience more often than not returns are increased by engaging in thoughtful asset allocation, as opposed to investing in a “factor” or smart” fund within a distinct asset class. In short, we consider these investments, and the Subscriber can work with us to use them selectively as appropriate given his or her particular risk tolerance profile.