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Custom Index SMA

  • WHAT IS IT?
  • WHY USE IT?
  • WHERE DOES IT FIT?
  • HOW DOES IT WORK

Custom Index SMA is a separately managed account investing in a portfolio of securities comprising an index. It is designed to deliver the performance of an index with fewer securities, while allowing customization based on client’s goals, tax situations and social values.

With the advent of zero commission and fractional share trading, combined with technological advances enabling mass customization at scale, access to Custom Index SMA has become easier than ever.

Custom Index SMA offers the combined benefits of index investing and personalization. Investing in Custom Index SMA through GAMMA’s platform helps investors achieve several objectives:

  • Potential to improve returns.
  • Tax Savings.
  • Personalization based on individual goals and social values
  • Lower fees

Custom Index SMAs serve as powerful tools to help you build holistic portfolio solutions and implement asset allocation strategies for your clients. Use Custom Index SMA as:

Core Equity Holding: replace underperforming active mutual funds or core ETFs to enhance after-tax excess returns.

Tactical Exposures: capitalize on SMA’s structural advantages to access any segment of the equity market and generate opportunistic alpha.

Income Allocation: an SMA allows buy and hold strategies tailored to your income needs that is not possible through bond funds or ETFs.

A Custom Index SMA can be easily constructed by following a simple process we have developed digitally:

  1. Design the market exposure: choose from a broad array of index strategies for equities and fixed income.
  2. Customize the portfolio: apply ESG screens or integration, sector/industry/security exclusion, and tax management.
  3. Define other portfolio parameters: limit on tracking error or maximum number of securities allowed.
  4. Transition the account: choose to fund the account with cash or securities in legal positions without incurring unnecessary capital gains.
  5. Ongoing support: year-round tax management and client support to answer questions and discuss opportunities/challenges.

Contact us to help you create a portfolio of Custom Index SMAs that meet your asset allocation objectives.

Custom Index SMA offers several structural benefits vs. an ETF

ETF GAMMA’s Custom Index SMA

Market Exposure

Tracks a broad range of indexes/exposures across different asset classes.

Tracks a broader range of indexes/exposures than ETFs, by allowing investors to create and implement their own strategies.

Ease of Access

Easily tradable on an exchange intraday.

Easily accessible through GAMMA’s digital platform.

Customization

One-size fit all investment that cannot be customized.

Fully customizable indexed solution tailored to client’s specific goals, tax situations and social values

Tax Efficiency

Tax efficient by avoiding capital gains distributions at the fund level. However, it cannot pass through losses to investors, and can only harvest tax losses in down markets.

Can pass through losses to investors at the individual security level and harvest tax losses in both down and up markets.

Cost

While management fees may be low, the cost from secondary market trading may be high. One-size-fit-all management fee structure.

Competitive pricing vs. ETFs due to GAMMA’s highly efficient and scalable model. Flexible advisory fee structure based on investment size and overall relationship.

Advisor's Involvement

Advisor’s control is minimal since ETFs are one-size-fit-all investments whose investment objectives are fixed.

Advisors are actively involved in defining parameters that guide investment decisions in an SMA.

Investment Size Limit

No limit on investment size.

Technological advancements and the advent of zero commission and fractional share trading have enabled lower investment size in an SMA.

Who We Serve

How does Custom Index SMA meet client needs?

Use Cases

The CEO

A CEO of a publicly traded company owns a large percentage of his own company’s stock. Custom Index SMA allows the CEO to reduce portfolio concentration risk by excluding his company stock from the portfolio.

The Tax Payer

A high-net-worth investor wants to grow his portfolio, but worried about the implications of capital gains on his returns. Custom Index SMA allows the investor to harvest losses on individual securities to offset gains, while tracking index returns.

The Activist

An environmental activist is uninterested in owning securities related to nuclear power and oil. Custom Index SMA gives the Activist the flexibility to exclude industries mis-aligned with investor’s interests from the portfolio.

The Retiree

An investor is 5 years from retirement and currently in the highest tax bracket. Custom Index SMA allows the Retiree to maximize his portfolio returns by deferring capital gains until retirement when the tax bracket is lowered.

The New Client

An investor is interested in moving her portfolio to GAMMA but is worried about the tax implications of liquidating legacy assets. Custom Index SMA allows the New Client to transition the legacy positions into the new target strategy without incurring unnecessary capital gains.

Lorraine Wang, CFA®

Founder & CEO

Lorraine Wang is the founder and CEO of GAMMA Investing. Lorraine is a 30-year industry veteran in financial services, with over two decades of institutional asset management experience. She has proven track record in growing an ETF startup to a $300 billion franchise in 14 years, through product innovation and successful commercialization of a unique product range. Previously, Lorraine was the Global Head of ETF Products & Research at Invesco PowerShares. She also served in various leadership positions at the New York Stock Exchange, Morgan Stanley, JP Morgan and Citi. Lorraine received a B.S. degree in Management Science from MIT and is a Chartered Financial Analyst. Lorraine resides in Westchester NY with her husband and two kids. During her free time, she enjoys traveling around the world and playing golf with her family.

JR Rieger, CRC®

Senior Advisor, Fixed Income

JR Rieger is a Senior Advisor for GAMMA Investing, responsible for fixed income and hybrid securities strategies. JY is a bond market veteran with over 39 years of experience. JR is also the founder of the Rieger Report® LLC. providing periodic market commentary, perspectives and insights into the fixed income markets through the newsletter. He is also an advisory board member of BondView®, assisting financial institutions with fixed income analytics, indexing & benchmarking, index selection, fixed income valuation and mark-to-market compliance related issues.

Prior to starting the Rieger Report®, JR was the Managing Director and Global Head of Fixed Income Indices at S&P Dow Jones Indices. Prior to joining S&P Dow Jones Indices, JR served as the Global Head of Bond Evaluations at S&P Securities Evaluations Services (formerly known as J.J. Kenny).

JR is a member of the CFA Society, National Federation of Municipal Analysts, Municipal Analysts Group of New York and the Fixed Income Analysts Society. JR is also an Associate Member of the Securities Experts Roundtable. In 2019, JR became a Certified Retirement Counselor to bring his bond market experience to the retirement planning process.

Yu-Ming Wang

Senior Advisor, Corporate & Investment Strategies

Yu-Ming Wang is a Senior Advisor for GAMMA Investing, responsible for guiding the development and implementation of GAMMA’s corporate and investment strategies. Yu-Ming was previously the President and Global CIO at Matthews Asia, responsible for the strategic vision and leadership of the investment team. Prior to joining Matthews Asia in 2020, Yu-Ming was the Deputy President and Global CIO at Nikko Asset Management, responsible for strategic development and oversight of Nikko’s global investment team. Previously, Yu-Ming was Head of Fixed Income Asia at Manulife Asset Management in Hong Kong. He also worked at Wachovia Bank in senior roles in the capital markets division in New York, before moving to Hong Kong to head the global markets business for the Asian region. Yu-Ming received his MBA from New York University Stern School of Business and received a B.S. in Mechanical Engineering from MIT.

Richard Ranck, CIMA®

Senior Advisor, Distribution & Marketing

Richard Ranck leads the distribution and marketing efforts to support GAMMA’s investment advisory business. Richard is also the Founder & Managing Partner of Valor Consulting & Distribution. He is an industry veteran and entrepreneur with more than two decades of investment management experience serving financial advisors, RIAs and investment professionals. Previously, Richard served in business development roles with Veriti Management, Eventide, Invesco, PowerShares and Morgan Keegan. Outside of the office, Richard enjoys spending time with his wife and 5 kids on their farm. Richard is active in his local church and enjoys crossfit, hunting, skiing, horseback riding, and camping.

Ed McRedmond

Senior Advisor, Strategic Partnerships

Ed McRedmond is a Senior Advisor to GAMMA Investing, responsible for the acquisition of strategic partners, clients, and key industry contacts. Ed is also the Founder of etfEd Advisory, which provides consulting services to existing ETFs and asset managers looking to enter the space, with a focus on sales & distribution strategy. Ed has over 20 years of experience in the ETF industry in a variety of roles including key accounts, institutional sales, relationship management, research and model portfolio management. Previously he was Senior VP, Director of ETF Business Development & Portfolio Strategies at Invesco PowerShares. Ed is also a Contributing Editor for the ETF Business Review. Ed graduated from Quincy University with a Bachelor’s degree in Economics.

Zlatko Martinic, CFA®

Chief Investment Officer

Zlatko Martinic is the Chief Investment Officer at GAMMA Investing. Zlatko is a seasoned investment management professional with over 25 years of experience managing and delivering innovative and bespoke custom portfolio solutions. He is responsible for leading GAMMA’s investment process by using an institutional approach to index investments that blends risks and investment objectives. During his career, he built and managed high performing investment teams servicing strategic account relationships.

Prior to joining GAMMA, Zlatko was the Head of Transition Management at Penserra and the Head of Portfolio Implementation Americas at BlackRock. He is a global citizen having lived and worked in Switzerland and speaks 5 languages. He attended the Business and Commerce School in Baden, Switzerland and is a Chartered Financial Analyst.
Zlatko resides in Oakland, CA with his wife and 2 children. During his free time, he enjoys travelling abroad and spending time on California’s beautiful beaches.