Recognized as an innovator in regime-based investing, Auour navigates the changing risk landscape through a disciplined, systematic process — built on fundamental principles and rigorous quantitative research.
The investment industry spends most of its energy on stock selection — identifying managers who can beat their benchmark through superior analysis or timing. It's a compelling idea. The evidence, however, is not compelling.
Market participation and asset allocation drive approximately 90% of investment returns. Active stock selection beats its index only 1 time in 5. And risk — unlike alpha — is measurable, patterned, and responds to discipline.
Auour is built around these facts. We focus our effort on the decisions that actually move the needle: when and how to be allocated to world markets, how to shift that allocation as risk conditions change, and how to minimize the cost drag that quietly erodes returns over time.
Auour maintains a proprietary multi-factor model that analytically characterizes markets across a spectrum of risk. Using fundamental global market data gathered nightly, the ARM gains insight into the risks residing within various asset classes around the world — then adjusts allocations to match the expected regime.
Momentum plays an important role in understanding the emotion within the market. When investor sentiment drives prices materially away from fundamentals — in either direction — momentum signals act as an early warning. We use this to detect regime shifts before they are reflected in asset prices.
Valuation factors act as mean-reverting components within the ARM model. While momentum captures short-term emotion, valuation anchors the model to long-run fair value estimates across global asset classes — preventing the model from remaining in an extreme regime longer than fundamentals justify.
Economic factors are critical to the health of markets. Credit markets in particular stand as an important forward-looking gauge of future economic growth. Widening credit spreads, deteriorating lending conditions, and tightening financial conditions all factor into the ARM's economic assessment.
The interaction of world markets helps discern localized trends from globally significant events. A regional banking stress may be contained; a synchronized deterioration in credit conditions across multiple economies signals something deeper. The ARM evaluates cross-market correlations continuously to make this distinction.
The above regime spectrum is illustrative. The ARM model was developed in 2013. There is no guarantee that any past predictive ability will continue into the future. Auour retains the right to adjust the model as it sees fit to adapt to new market conditions.
The ARM model runs every night, pulling market data from around the globe, assessing the risk regime, and — where warranted — adjusting portfolio allocations. This systematic discipline aims to remove the emotional decision-making that costs most investors returns.
Market data from equities, fixed income, credit, currencies, and commodities across global markets is collected nightly from multiple sources.
The ARM model scores momentum, valuation, economic, and interaction factors — producing a composite regime signal that places the market in one of five states.
Asset allocation is adjusted to match the measured regime — shifting between equities, fixed income, and defensive positions based on signal strength, not emotion.
When a change is warranted, trades are executed using low-cost, liquid ETFs — minimizing transaction costs, tax drag, and implementation slippage.
Auour's investment strategies make extensive use of exchange traded funds. These vehicles provide lower-cost methods to achieve exposure to many global asset categories, with advantages for trading and tax efficiency.
We use ETFs to access domestic and global equities, fixed income securities, and commodities — enabling us to efficiently create portfolios designed to gain desired exposures in any market environment, without the cost drag of active management.
Our goal is to increase the purchasing power of client investment portfolios. We seek to minimize fees and expenses within financial vehicles to provide the most return possible.
Studies show that individuals do not capture the full potential of investment markets because they look to protect their principal after the market has already dropped. Regret-driven decisions — panic at the bottom, complacency at the top — erode long-term returns significantly.
Auour's method of downside mitigation looks to be proactive — defending principal as markets start to get rough, rather than reacting after damage is done. Our experience is that clients who avoid the deep drawdowns are more able to ride out difficult periods and take advantage of opportunities when they emerge.
We bring a dynamic analytical approach: actively defending principal in volatile periods while pursuing growth when and where appropriate. The ARM model shifts allocations continuously, not just during crises.
Whether you're a private client or a financial adviser, the ARM model can be the backbone of a smarter approach to risk.
“Auour blends fundamental principles with mathematics — collecting vast amounts of data to tune allocations to market risk conditions.”