Customer FAQ

iSectors Allocations are unique and offer multiple advantages to investors:

  • iSectors® Post-MPT Allocations maintain optimal portfolio allocations by rebalancing portfolios regularly as the investment environment changes. Post-MPT models are iSectors’ flagship series. These models offer an enhanced approach to traditional Modern Portfolio Theory (MPT) that catapults MPT to a new level of excellence. iSectors Post-MPT models’ impressive returns and low risks can be attributed to:
    • A more robust asset allocation algorithm that uses more than a dozen relevant economic variables to determine and regularly rebalance back to an optimal portfolio allocation. This process modifies allocations based on changing economic conditions and factors.
    • A superior approach to diversification using asset classes such as: US Treasury bonds, real estate, infrastructure, commodities and others. Note: Diversification does not necessarily ensure a profit nor protect against a loss in a declining market.
    • Our approach considers “negative returns” as the “risk” investors want to avoid, volatility (standard deviation) is a less appropriate measure of “risk.” Standard deviation, the historical traditional measurement of risk measures both upside AND downside volatility as risk. For example, a stock or investment that has large upside volatility (unexpected gains) is considered to have the same level of risk as an investment with large downside volatility (unexpected losses) when measuring risk by standard deviation. Our approach is more congruent with behavioral finance and “real world” investor views.
    • Low fees (when compared to actively managed mutual funds). In addition, all accounts are highly liquid and separately-managed accounts.
  •  iSectors® Endowment Allocation is an institutional quality asset allocation model that embraces the philosophy pursued by the managers of Endowment portfolios at institutions such as Yale University. These endowment funds, have been aggressively allocating to “Alternative Investments” like hedge funds, private equity and real assets, for decades. The strategy of over weighting alternatives has enabled them to out-perform their university endowment fund peer group; they have achieved this superior performance while reducing overall portfolio volatility (risk). While the iSectors Endowment allocation is not designed to mimic a university endowment fund to the fullest extent, it does contain a significant allocation to “alternative investments.” While iSectors does allocate to alternative investments we do not invest in private partnerships which are illiquid and only available to accredited investors (i.e. investors with a net worth exceeding one million dollars). All iSectors portfolios remain liquid and available to any institutional or individual investor they may be suitable for. These unique advantages are achieved by using alternative investments that are available either through an ETF, open and closed end Mutual Funds, exchange-listed Business Development Companies (BDCs), listed Master Limited Partnerships (MLPs), or SEC registered pfunds. While our investment strategy doesn’t specifically exclude exchange-traded notes (ETNs), these are not typically in our models.
  • iSectors® Tactical Series (Tactical Global Balanced, Tactical International) offer flexible strategies that remain invested when it appears opportunities may provide return potential and rotate to cash when it appears that trends have reversed and investors may be better suited to be in cash.
  • iSectors® Inflation Protection and Precious Metals Allocations have been designed to help investors protect their portfolios from the threats of inflation.
  • iSectors allocations are available in separate or unified managed accounts. This means that your account is held in your name at an independent custodian; the securities held in your account belong to you. The investment platforms that we work with provide you with 24/7 access to information regarding your holdings, performance and tax reports. Therefore, you benefit from tax advantages, transparency, lower costs, liquidity and control not offered by mutual funds or other investments such as hedge funds.
  • iSectors is committed to the best service and low expenses. We are able to provide clients cutting edge investment management services and a world class web-based reporting platform (updated daily).

Exchange-Traded Funds (ETFs), open and closed end Mutual Funds, exchange-listed Business Development Companies (BDCs), listed Master Limited Partnerships (MLPs), or SEC registered funds. While our investment strategy doesn’t specifically exclude exchange-traded notes (ETNs), these are not typically in our models.

Click here for our article that explains why ETFs have lower fees than mutual funds.

iSectors allocations have been applied in investment accounts since 2005. As of April 2018, over $250 million is invested in iSectors allocations. iSectors, LLC is an affiliate of Sumnicht & Associates, LLC (Sumnicht) and, as such, iSectors and Sumnicht share certain employees’ services. Sumnicht is an SEC registered investment adviser located in Appleton, Wisconsin. iSectors became a separate Registered Investment Advisor in August, 2008. Sumnicht & Associates has provided clients with independent investment advice and wealth management services since 1988. The firm was founded by Vern Sumnicht, CEO, MBA, CFP®. Sumnicht & Associates is independent and is not affiliated with any bank, broker or asset management firm.

iSectors® implements a number of proprietary strategies which are intended to help investors increase their risk-adjusted return (the return generated by measuring how much risk is involved in producing that return). Our various series of models implement different methodologies in order to generate risk-adjusted returns. For example:

iSectors® Post-MPT Series implements a dynamic approach that allocates its investments to as many as nine different asset classes that have less correlation to each other than the traditional asset classes that are perhaps more commonly used for portfolio diversification. iSectors’ research has shown that this strategy offers more effective diversification and can lessen the impact of prolonged market declines. Of course, it should not be assumed that future performance of any specific investment product, including iSectors, will equal past performance.

iSectors® Tactical Series attempts to provide improved risk adjusted returns by rotating to cash when each respective model’s targeted asset classes appear to be headed into protracted declines. These models apply momentum-based algorithms to identify and time these decisions so that the process remains systematic and objective.

iSectors® Endowment Allocation seeks to provide superior risk-adjusted returns by blending liquid alternatives with traditional stock-bond portfolio. These liquid alternative investments include private equity, hedge strategies, and real assets, all in the form of registered securities such as ETFs, open-end mutual funds, closed-end funds, exchange-traded notes and business development companies (BDCs). The Endowment Allocation is based on the approach pioneered by large university endowment managers, who dedicate a greater percentage of the portfolio to alternative investments than most traditional endowment funds. Because alternative investments are typically less liquid than stocks and bonds, alternative investments often possess pricing inefficiencies that offer the potential for improved returns.

iSectors® Inflation Protection Allocation and Precious Metals Allocation offers investors two vehicles which may help hedge against the risks of inflation. Official government figures maintain that there doesn’t currently appear to be significant inflation in our economy. However, official government statistics typically don’t include food and energy costs, both of which are significant costs to most households. Thus, inflation tends to be understated. The Inflation Protection and Precious Metals Allocations have been designed to help investors prepare themselves and their portfolios for ongoing inflationary pressures.