Family Micro-Office Defined

Firstly, what is a Family Micro-Office? Yes, there is such a thing -- it is the forgotten market segment between retail and HNW where: 1. Staff is out of the question given AUM, 2. Typical mass-market retail solutions are too blunt and too confined, and 3. There is a high chance of getting fleeced by investment advisors who generate less alpha than their fees. While there are plenty of wonderful investment advisors well worth their fees, they are often not accessible given micro-AUM and/or are not sufficiently motivated to devote attention to smaller accounts.

An added dynamic is that most individuals in this segment are technically inclined (often having gained success from the tech industry), motivated to learn, ambitious, and sophisticated enough to push the envelope on retail tools. They realize a blind allocation of everything into the S&P 500 is not a panacea, yet often do not understand how to think about a better asset management process.

Our Approach

We are a Family Micro-Office. For now, we manage our own money and nothing else. We are not accountants, we are not lawyers, we are not registered investment advisors, and we do not want to manage your money. We are not selling anything here, so learn with us, but know that you alone are responsible for your returns (please see disclaimers at the bottom.) With that said -- there is much to learn and we'd love any informal collaborations we can establish to learn together (get in touch!) We want blunt feedback on our mock Investor Letters, strategies, deep-dive postings, and post-mortems.

In full disclosure, all my asset management non-competes have finally expired, so in the near future we might have LPs, but first we'd like to prove our performance. Proving our worth will be an interesting exercise, because we have advantages (we can pursue low capacity strategies) and disadvantages (we know all about the professional tools and datasets out there, but are limiting ourselves to only retail offerrings as part of this exercise.) In the spirit of proving ourselves, we've been sending out quarterly Investor Letters to maintain discipline and intellectual honesty (you can get on our mock LP email distribution and provide feedback, sign up here.)

Also in full disclosure (have I mentioned all my hedge fund non-competes have finally expired!?), we recognize the large opportunities to create useful products in this space -- allocation tools, data products, data-synthesis products, indices, etc. We are trying to be altruistic, collaborative, and adventurous -- so we are publicly releasing a lot of details most would not -- however we do reserve the right to try and productize some of our learnings in the future. With regards to productizing -- we're going to eat our own dogfood here, with real money on the line, in an effort to evaluate the efficacy of products. If demonstrably valuable, we might prod budding startups to create tools for some of these ignored segments with the assistance of a syndicated Angel investment -- or we might outright choose to create our own tools as future startup founders.

Of course, our research, public talks, assets, and findings become available into the public domain for common benefit.

Investment Thesis & Philosophy

1. Most retail investors over-pay for average performance
2. Most retail investors incorrectly allocate into an overly-confined set of assets
3. Most retail objectives can be achieved with low-cost ETFs and public securities, but with thoughtful tooling reflecting proven asset allocation academic theory
4. Given AUM, the above usually does not matter much to most retail investors, but seriously matters for some, and especially for ambitious Family Micro-Offices
5. Manager-of-Manager strategies are too often relationship based w/o sufficient performance scoring
6. Some typical hedge fund strategies can be executed inexpensively in-house with standard tooling and some ambition
7. Unstructured real-time big-data sources are under-used by most investors, and can be used effectively if good data products are created (e.g., smart indices)
8. We believe we can gain at least 50-75bps by (A) adding opinion to broad indices via component long-shorts, and (B) using geospatial and graph analyses to better select winning/losing components on broad indices
9. Good Legal+Accounting planning advice is mandatory and cannot be hacked -- but, expensive asset management need not be bundled into that package. The first should provide a framework, and the later can be achieved more effectively within that framework, but obtained a la carte.