David Heck: Asset Allocation Is The Key
August 31, 2012
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The post-credit-crisis stock market has been a tough row to hoe for most retail investors, some of whom have watched their portfolios dwindle and income opportunities vanish, says David Heck of Rhinelander, Wis.-based Heck Capital, an advisory and investment management firm that has built a reputation for success during difficult times.
Heck, who will be speaking at IndexUniverse's Inside Fixed Income conference next month, emphasized in a recent interview with IU Correspondent Cinthia Murphy that while the equities markets will get better from here, asset allocation and diversification using broad-market ETFs are the best ways to survive current markets.
Murphy: Tell me a little bit about your business. You offer three portfolio management programs that allow investors to either narrowly focus or broadly diversify their exposure. How do you go about building these portfolios?
Heck: Heck Capital Advisors is a family-owned investment management company specializing in portfolio management, consulting and planning. We have been serving clients from the heart of Wisconsin, where my father, Robert Heck, first began his investment career in the 1950s. In 2007, we started Heck Capital Advisors after being affiliated with a Wall Street Firm, as we wanted to provide truly independent services. We now provide investment management and consultation to clients in more than 32 states with a combined $2 billion in assets.
As far as our portfolios, the first step we take is to sit down and go through an investor’s objectives to measure risk tolerance, and from there we determine fixed income, equities and cash allocations for that individual investor. We first design the asset allocation plan and then we go through the different products—including ETFs—to see what best fits our goal.
Murphy: How much of your portfolio is allocated to ETFs?
Heck: We have one all-ETF portfolio and we also have ETFs in other mutual fund and equities-based portfolios. We’ve been using ETFs for many years, but we first launched a style comprising only ETFs in 2006.
Murphy: What were the first ETF products you found to be successful, and which ones have been disappointing?
Heck: We have utilized SPDR’s SPY and GLD as a way to track the S&P 500 Index and to gain exposure to gold bullion for our clients in a convenient manner. No products in particular have been disappointing, but one of the things we have found difficult is to invest in a pure-agriculture ETF.
But with the continued growth of ETFs, what’s most important for us is to understand the index, the fund that tracks it, how it replicates it, as well as having enough liquidity and volume to comfortably invest.