Introduction

Hedgewise utilizes an intelligent "managed account" structure, in which we are given permission to make trades within a client's brokerage account at an independent custodian. This allows us to essentially skip the creation of an ETF or mutual fund. For example, rather than creating an ETF that always holds 10 underlying stocks, we can simply buy those 10 stocks for a client directly. Hedgewise pays for all trading commissions, does all the rebalancing, and even optimizes for taxes. By operating in this way, clients get access to a number of significant benefits.

Benefits

First, we are able to create new products faster and offer them at a lower cost. This is because we avoid the significant time and regulatory expense involved in bringing an ETF or mutual fund to market.

Second, clients no longer have to worry about trading commissions. We cover these as part of our fee just like an ETF covers operating costs as part of its expense ratio. We are just removing a layer in the middle and passing the savings along to our clients.

Third, our products tend to be more intelligent and flexible than a typical ETF, which is usually tied to some kind of simple index and has rules that are set in stone. We build our investment algorithms to be responsive to changes in market conditions, and can continuously improve them over time.

Fourth, our products are customized for each individual client, taking into account factors like taxes and even offering customizable risk levels where appropriate.

Finally, we are able to offer significant fee discounts for larger account sizes. Imagine trying to negotiate a lower fee with an ETF provider!

Independent Custodian

By keeping an account at an unaffiliated custodian, you get peace of mind that your assets are fully SIPC insured and always under your control. Hedgewise is simply given permission to manage your portfolio on your behalf. After opening and funding the account, Hedgewise clients can monitor their performance and change their portfolio allocation through their personal Hedgewise dashboard.

Disclosure

This information does not constitute investment advice or an offer to invest or to provide management services and is subject to correction, completion and amendment without notice. Hedgewise makes no warranties and is not responsible for your use of this information or for any errors or inaccuracies resulting from your use. Hedgewise may recommend some of the investments mentioned in this article for use in its clients' portfolios. Past performance is no indicator or guarantee of future results. Investing involves risk, including the risk of loss. All performance data shown prior to the inception of each Hedgewise framework (Risk Parity in October 2014, Momentum in November 2016) is based on a hypothetical model and there is no guarantee that such performance could have been achieved in a live portfolio, which would have been affected by material factors including market liquidity, bid-ask spreads, intraday price fluctuations, instrument availability, and interest rates. Model performance data is based on publicly available index or asset price information and all dividend or coupon payments are included and assumed to be reinvested monthly. Hedgewise products have substantially different levels of volatility and exposure to separate risk factors, such as commodity prices and the use of leverage via derivatives, compared to traditional benchmarks like the S&P 500. Any comparisons to benchmarks are provided as a generic baseline for a long-term investment portfolio and do not suggest that Hedgewise products will exhibit similar characteristics. When live client data is shown, it includes all fees, commissions, and other expenses incurred during management. Only performance figures from the earliest live client accounts available or from a composite average of all client accounts are used. Other accounts managed by Hedgewise will have performed slightly differently than the numbers shown for a variety of reasons, though all accounts are managed according to the same underlying strategy model. Hedgewise relies on sophisticated algorithms which present technological risk, including data availability, system uptime and speed, coding errors, and reliance on third party vendors.