The Keys to Successful Tactical Management

Terri Spath is chief investment officer at Sierra Investment Management, the parent company of the Sierra Mutual Funds and Ocean Park Asset Management. She is responsible for market and economic analysis, portfolio allocation, investment strategy and building client solutions at the firm. Terri previously served as deputy chief investment officer at Mercer Global Advisors. Her extensive experience in the financial services industry includes portfolio management and analyst responsibilities at Franklin Templeton, Fidelity Investments and RSF Capital Management.

Terri holds the Chartered Financial Analyst and the CFP® designations. She earned an MBA from Columbia Business School and an A.B. from the University of Michigan.

I interviewed Terri last week.

What is the history of Sierra and what led you to introduce your mutual funds?

Sierra was founded in 1987 by Dave Wright and Ken Sleeper, who were focused on providing like-minded conservative investors with a disciplined, rules-based investing approach. After two decades of seeing how well their clients responded to a concerted effort to provide downside protection and mute volatility, Sierra took its approach, previously only available in separately managed accounts, and created those same strategies in a mutual fund format. Obviously, this provides far greater access for investors and advisors seeking a manager with a track record of limiting drawdowns while generating satisfying risk-adjusted returns over time, but it’s no less important now than when we exclusively offered SMAs that our clients understand our processes and that their goals are aligned with ours.

Tell us a little bit about how Sierra invests. What’s unique about your approach?

Our investment approach is centered on tactical asset allocation. We allocate to mutual funds and ETFs across the range of asset classes, including global equities and bonds, commodities, currencies and alternative investments, with a focus on keeping clients out of trouble while earning a satisfactory return over a market cycle. Our investment philosophy is rooted in a disciplined, rules-based approach that uses time-tested proprietary metrics to identify changes in trend and answer the questions of when to buy and when to sell in a given asset class.

On a daily basis, we look at every holding across every account to identify whether a position’s trend has reversed from rising to falling and moved through our dynamic “line-in-the-sand” trailing stop sell level. Similarly, we rank and identify any mutual fund or ETF which has developed a rising trend and reached a buy level. So our approach is very tactical and predicated on a holistic view of all the asset classes we monitor. We are looking to dynamically allocate to asset classes with the right valuation, and limit exposure to those that, according to our conservative metrics, are no longer as attractive.