In this Swift Chat video conversation, Marie Swift of Impact Communications, Inc., speaks with Ariel Acuna, creator of The Aqueduct Strategy. This top-performing investment strategy is available to RIAs on the Fidelity Separate Account Network.
Ariel, who has worked with his own clientele as a financial advisor for nearly 30 years, created The Aqueduct Strategy -- which has, according to the Informa Zephyr data available via the Fidelity Separate Account Network, outperformed the past 10 years.
RIAs on the Fidelity platform can access The Aqueduct Strategy data by logging in here: www.TinyURL.com/AqueductStrategybyLTGCapital
We have about 11 years’ worth of track record. Over the last 10 years, we rank in the top 10, every single year. Out of the 1600 investment strategies run on the Separate Account Network for Fidelity there are only two advisors, with us being one of them, that have a strategy that ranks in the top 10 every single year." ~ Ariel Acuna, Creator of The Aqueduct Strategy
Marie Swift: Well, hello everybody and welcome back to another great Swift chat. Today I have Ariel Acuna and he is the founder of LTG Capital and he is the creator of something called The Aqueduct Strategy. So, we're going to learn more about Ariel and how he works with his own clients, but also about this strategy that is available to other advisors to RIAs specifically and on the Fidelity Separate Account Network now. Ariel, welcome to the show. I wanted to get you talking first about your backstory and how you got to be at this position in this place in life.
Ariel Acuna: Hi Marie, thank you so much for having me. The reader's digest version is that my dad was a doctor in South America and when I was a kid, I'd accompany him on his weekend house calls. His patients and their families were always very oppressive and grateful for his care. I thought that someday I'd like to help people the same way, but I couldn't stand the sight of blood, so I went into finance instead. I've been in the personal financial advisory business working with individuals for 27 years and have had my own company LTG Capital since 2003.
Over the 27 years in the industry, I've learned a lot about human nature and investing and that's culminated in developing very special investment strategy that I named Aqueduct.
Origins of The Aqueduct Strategy
Swift: So, thinking about your unique investment philosophies and The Aqueduct Strategy, what would you like the advisors and people in the industry who are watching this video, what should they know about your thinking in that regard?
Acuna: You know, the crux of the strategy is really taking full advantage of people's propensity to panic. The biggest assumptions and world views that I have, it's really that it's never the end of the world, that this time is not different, and the market always moves on to higher highs and since the game I'm playing is a long-term multi-generational capital appreciation game I'm always fully invested, right.
During times of when there's light stimulus you know, fiscal and monetary, we're fully invested in a portfolio of diversified exchange, traded funds, small, medium, large, domestic, and international. However, during severe bear markets, when there's something wrong with the economy and the market has had its teeth kicked in and it's lying, lifeless and bloodied in the gutter down 30, 40, or 50% or more from previous highs. We hear the fiscal and monetary stream that stimulus is going through the roof to try and fix the problem. At this point, what we do is we sell the diversified portfolio of exchange, traded funds, and buy levered exchange, traded funds, small, medium, and large, and just wait for the recovery.
Eventually when things get back to normal and the market is on to higher highs and the Fed starts raising rates. Then we go back to the traditional non levered exchange rate fund portfolio, and we just wait for the next bear market. As a side note, the returns over the last 11 years, as well as you have today, 2021 have been exceptional.
Outperforming Peer Group
Swift: So, I understand that you're on the Fidelity Separate Account Network and that other advisors can access The Aqueduct Strategy that way. Talk to me a little bit about how you rank among your peer group on that network.
Acuna: You know actually quite well. We have about 11 years’ worth of track record. Over the last 10 years, we rank in the top 10, every single year. Out of the 1600 investment strategies run on the Separate Account Network for Fidelity there are only two advisors, with us being one of them, that have a strategy that ranks in the top 10 every single year.
Teaching Clients to Embrace Volatility
Swift: So, it sounds like there could be some volatility that people really need to be able to stomach. In your work with your own clients, how do you teach them to stand that volatility?
Acuna: Well, you know that's a great question. All RIAs know that being in equities makes our clients the most money. However, all our RIAs know that keeping clients’ inequities in specific portfolios through decades of investing is extremely difficult.
People always want to do the wrong things for the wrong reasons at the wrong times unfortunately. So, with each scheduled meeting I have with my clients, I deliver what I call volatility or lifeboat drills. I really think of myself as a financial advisory chiropractor that must continually habitually and perpetually adjust clients, innate propensity to blow themselves up.
I deliver as passionately as I can as much investment education as I can and have them really do a gut check, really put themselves in the situation that I'm trying to paint for them so that when eventually we do have a bear market, when we do have significant volatility, they're more prepared for it.
Swift: So, with the Aqueduct Strategy, one of the things I believe you say you'll do is to help advisors who are using the strategy, even handhold their clients. Do you ever get asked to do that? Or how would that play out?
Acuna: Right. Not so much their end client, but I would provide some sort of training and give examples of what I consider my little lifeboat or ball of volatility drills to the advisors so that they could replicate them in case they wanted to.
I've been doing this for these drills for, I don't know, probably a decade so I have a treasure trove of them. Some of them are financial advisory based, but a lot of them are how it is to be prepared for the emotions that you're going to feel when you're experiencing significant volatility.
Swift: Having walked in the moccasins of the advisors who would be using the strategy, you could provide some useful tips as a coach, more or lesser support for the advisor, not working with their end clients.
Supporting RIAs with a Proven Strategy
Acuna: Yeah. You know, the way I see it is just being in an all equity portfolio is, or with my strategy is just being all equity there's volatility enough right. And so, you put in the leverage exchange traded funds, and there's more volatility, more upside volatility, but there's more volatility, nonetheless. The way I look at it is I really want to partner with the RIA to help them keep their clients invested in the strategy, because that's the only way the strategy works. I mean to have the success we've had against all other advisors on the Fidelity Separate Account Network for the number of years that I've been running the strategy right. You know, I need the RIAs to be an extension of me kind of thing. I'd like for them to really take to heart this lifeboat of volatility drills and just do it each and every single time they speak to the client for the regular progress meetings.
Swift: Thinking about the times we're living through 2020 and into 2021, is there anything on your radar that you would like to just add around the strategy and the economy, and some people are talking about inflation again. How does that impact your Aqueduct Strategy?
Acuna: Right. And this strategy is really a very big macro strategy. What it focuses on is especially when you're in the leverage is how much fiscal and monetary stimulus there is in the economy. Right now, you know, going from the depths of the bear market last March 23rd, 2020. To wherever we're going is never a straight line up. There are always concerns and worries.
Talking heads like to bring up issues in the light. However, my eyes are solely on the Fed and what they do. Once the Fed starts raising rates, it's when I start looking at getting out of the leverage exchange traded. So right now, I don't see the Fed funds rate increasing until 2024 or 2000 who knows 25 or something like that. Now that doesn't mean that things can't change, but I wait for the Fed to make their move rather than listen to all the noise.
Swift: Interesting. So, in closing, what would you like to leave our listeners with our viewers with how can they learn more about the aqueduct strategy?
Acuna: Well, one of the easiest things they can do is go to Fidelity Separate Account Network and all you have to do is just type LTG in the search field and you'll get right to our strategy, or you can sort by performance for any year over the last 10 years and we'll be there in the top 10. That's an easy way and my contact information is there so if you'd like to chat, like to find out a little bit more about the strategy or have some questions you want to ask please feel free to reach out. I'd love to talk to them.
Swift: Ariel Acuna thank you for being here.