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Investment Management
New Path's approach to equity investing is based on the idea of selective correlation. Traditional asset allocation specifies combining assets whose value moves independently of each other (i.e. they are non-correlated). This means those different assets will sometimes move in the same direction but often will not, leading to one increasing value while another is losing value. We believe that selective correlation can improve on that traditional approach. New Path seeks to be highly correlated with segments of the equity markets when they are providing positive returns. But we also want zero or even negative correlation with those markets when they are losing value.
Achieving selective correlation means that our clients have the potential of avoiding dramatic market declines as in 2008 and early 2009. But as importantly, it means we also have the ability to pivot back into equities in an attempt to capture the market’s upside move.
Our primary investment strategy is called the Actively Managed Allocation Strategy (AMAS). It is based on a quantitative trending model that analyzes the price levels of selected asset classes to determine which categories will receive investment, and the percentage of the portfolio to be allocated to each. The analytic model is updated and assets re-allocated on a monthly basis. We currently can have exposure to the following asset classes:
- US Large Cap Stocks
- US REITs
- Developed International Market Stocks
- Emerging Market Stocks
- Commodities - Oil
- Cash/Fixed Income
Performance as of 3/31/12
New Path's AMAS has a GIPS compliant composite that has been active since April of 2007.
| AMAS Gross | AMAS Net | S&P 500 (TR) | |
|---|---|---|---|
| QTD | 6.10% | 5.71% | 12.59% |
| YTD | 6.10% | 5.71% | 12.59% |
| 1 Year | -0.16% | -1.65% | 8.54% |
| 3 Year | 17.84% | 16.10% | 23.42% |
| 5 Year | 10.40% | 8.77% | 2.01% |
| Inception (4/2/07) | 10.40% | 8.77% | 2.01% |
| 2011 | -0.05% | -1.54% | 2.11% |
| 2010 | 7.89% | 6.29% | 15.06% |
| 2009 | 41.15% | 39.10% | 26.46% |
| 2008 | -3.29% | -4.73% | -37.00% |
| 2007 (partial year) | 5.02% | 3.86% | 4.82% |
About Us
New Path Capital Advisors is a Registered Investment Advisor (RIA) based in Silverthorne Colorado and was founded in 2007 by principals Ron Bristol and Kevin McDonald.
Assets Under Management or Advisement: $70M (as of 3/31/2012)
Personal Profiles
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Ronald G. BristolRon Bristol graduated from Westmont College in Santa Barbara, California in 1987 with a Bachelor of Arts in Economics and Business. After working for seven years in several corporate Accounting and Finance positions, he returned to academia attending Cornell University’s Johnson Graduate School of Management in Ithaca, New York. There he earned a Master of Business Administration with distinction, as well as serving as a teaching assistant for several finance and economics courses. Mr. Bristol joined American Express Financial Advisors’ (now Ameriprise Financial) corporate headquarters in 1996, and ultimately opened an independent financial advisory practice in Colorado in 2004. In 2007 he decided to focus solely on financial planning and investment management by forming New Path Capital Advisors, a Registered Investment Advisor. Mr. Bristol and his wife Cheryl have six children and live in the mountain community of Summit County, Colorado. He enjoys skiing and golf, and is active in numerous community organizations. |
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Kevin P. McDonaldKevin McDonald graduated from Colorado State University in Fort Collins, Colorado in 1983 with a Bachelor of Science in Business Administration. He immediately joined FirstBank Holding Company of Colorado as an officer in their Vail, Colorado office, where he quickly rose through the management ranks, ultimately being promoted to the position of President of FirstBank of Silverthorne in 1993. McDonald also served as Chairperson of FirstBank’s companywide Credit Policy Committee, which defined and monitored underwriting and lending practices for the $7 billion company. Mr. McDonald resigned from FirstBank in 2005, enabling him to expand his charitable and civic contributions to the local community, as well as broaden his exposure to business opportunities. He joined Ron Bristol as a business partner in 2006 and he continues to share ownership, operation and advisory duties of New Path Capital Advisors. Kevin and his wife Cindi have two children and reside in Silverthorne, Colorado. He enjoys skiing, hiking, golf, and cycling, and continues to serve the community in a variety of ways. |
How to Invest
New Path has provided several options to invest in our Actively Managed Allocation Strategy:
Mutual Fund – Individual investors and advisors can purchase the New Path Tactical Allocation Fund either directly or through one of a number of brokerage systems on which the fund is available.
Share Classes Available
| Investor Class | Institutional Class | |
|---|---|---|
| Minimum Initial Investment | $5,000 | $1,000,000 |
| Subsequent Minimum Investment | $500 | $1,000 |
Separately Managed Accounts (SMA) – New Path manages larger account sizes individually for those clients or advisors that want segregated management. Please go to the Contact Us page to call or e-mail us regarding questions or interest in an SMA relationship.
Unified Management Account (UMA) – The AMAS strategy is available on a number of well known UMA platforms. Feel free to Contact Us to find out if AMAS is already on your platform, or to request that we be added to it.
Frequently Asked Questions
New Path's performance pattern has been strong, especially in avoiding significant negative draw-downs (e.g. exiting Real Estate in Jul 2007, exit equities in Feb 2008). How do you predict how to position your portfolio?
We don’t predict anything. New Path's quantitative model is NOT predictive. However, it IS highly responsive to detecting changes in trend movements.
How has your model been able to respond so effectively in avoiding severely negative performance instances?
Analytics and Discipline. If our analytics detect significant deceleration of month-over-month rates of return, it triggers a full exit from that asset class. Our discipline drives us to reassess the trend each month and respond accordingly. If deceleration continues, our original readings are confirmed and we remain exit that position. Periodically, readings prove to be false (a "head fake") with a positive trend re-establishing itself. In those cases, our process discipline self-corrects and New Path re-enters the category.
If there's a negative market event between your monthly portfolio re-balancing will you make changes to the portfolio intra-month?
It's said that one should never say never. However, we have never intervened between our rebalancing periods and don’t anticipate doing so. During the design and testing of our quantitative analytics we found our model provided the best and most consistent results utilizing monthly portfolio rebalances. The market provides a constant barrage of information and "noise". Our model works best to filter that noise and focus in on truer trend signaling in monthly intervals. This remains part of our discipline today.
Can New Path's portfolio effectively manage a large mandate?
Many of our clients have significant assets in passively-managed indexes. We build our GTAA strategy using index-based exchange-traded funds (ETFs) which are liquid and able to handle significant trading volume. In fact, the client’s investment CONTENT (i.e. indexed asset class exposures) isn't really much different. However, hiring New Path to tactically manage and execute the timing and weighting of when and how much to hold that content has made a significantly positive difference to performance results.
How can we give a large SMA mandate to a boutique firm?
New Path is a boutique firm and large potential clients ask that question. While most institutional investors like to feel more comfortable engaging a manager after others have done so first, we point out that it’s skill that drives performance results and not the size of assets under management. Therefore, we ask potential clients to do two things: 1) evaluate the skill we can provide you, and 2) consider the validity of the usual risks in hiring any manager:
Counterparty Risk? Because your organization retains ownership of all brokerage accounts, with New Path having no distribution authorization (perhaps excepting management fees), there is no counterparty risk.
Business Risk? Remember that New Path only uses index-based ETFs in its portfolios, and that you retain direct ownership of the account itself. Should we experience some extreme operational event that impacts our ability to manage your organization's account, as the account owner you can simply instruct the custodian to liquidate any (or all) positions and transfer the account to another firm at your discretion.
Liquidity Risk? Negligible. New Path's clients' assets are held in their custodian account. There are no lock-ups, daily liquidity, and always full transparency.
Performance Risk? While we target the strategy to be more absolute return oriented, we do aim to outperform the general stock market with less volatility and less downside market capture. Since its 2007 inception, New Path's strategy has gone through a live "stress test" through some of the market's most extreme periods providing excess returns (net of fees) over the market (the S&P 500 Index), about half the volatility, and a fifth of the downside capture.
Capacity Risk? Trading of high-volume, highly liquid index-based securities makes New Path’s strategy extremely scalable (up to multiple billions of dollars in capacity) and liquid. As an example, we've analyzed the trading pattern of placing $1 billion of assets into the strategy (see attachment).
We have low costs for passive management. Why should we incur higher active management fees?
Fees are always an important consideration. The key question is: "does New Path's strategy provide enough excess return to justify those fees?" Since inception in April 2007, we have provided clients excess returns (net of fees) over the S&P 500 Index (with less volatility, beta, and downside capture).
Disclosures
| Period | Return % | Cumulative Return % | 3 yr Std Dev % | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (12/31 | Composite | % Firm | Perf | AMAS | S&P500 | AMAS | S&P500 | (Gross Returns) | ||||
| Yr End) | Accts | AUM SM | AUM | Disp. % | Gross | Net | Gross | Gross | Net | Gross | AMAS | S&P500 |
| YTD | 29 | 54.2 | 87 | NA | 6.10 | 5.71 | 12.59 | 64.01 | 52.25 | 10.48 | 13.37 | 16.45 |
| 2011 | 66 | 50.5 | 86 | 0.66 | -0.05 | -1.54 | 2.11 | 54.59 | 44.02 | -1.87 | 13.48 | 18.97 |
| 2010 | 42 | 46.5 | 85 | 0.20 | 7.89 | 6.29 | 15.06 | 54.67 | 46.28 | -3.90 | 13.18 | 22.16 |
| 2009 | 8 | 22.3 | 75 | 1.20 | 41.15 | 39.10 | 26.46 | 43.36 | 37.63 | -16.48 | ||
| 2008 | 6 | 8.4 | 58 | 0.89 | -3.29 | -4.73 | -37.00 | 1.57 | -1.06 | -33.96 | ||
| 2007* | 4 | 3.5 | 62 | NA | 5.02 | 3.86 | 4.82 | 5.02 | 3.86 | 4.82 | ||
*From 4/2/07 Inception, not annualized.
New Path Capital Advisors claims compliance with the Global Investment Performance Standards (GIPS) and has prepared and presented this report in compliance with GIPS standards. New Path has not been independently verified. The firm is an investment advisor established in 2007, registered with the SEC and is not affiliated with any other organization. The firm manages equity, fixed income, and balanced assets. Data includes performance linked from precursor firm, 4/2/07 to 11/15/07. Policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request.
The Actively Managed Allocation Strategy (AMAS) seeks absolute return using global tactical asset allocation and invests in index based exchange traded funds (ETFs) to gain exposure to desired asset classes. AMAS is considered an equity investment but can fluctuate from 100% equity to 100% bonds and/or cash. AMAS may invest also invest in an ETF that approximates the inverse performance of the S&P 500. The S&P 500 is used as the benchmark for comparison purposes, with both the strategy and benchmark valued, and performance reported in U.S. dollars. Gross-of-fees performance returns are presented before management and custodial fees but after all trading expenses. Net-of-fees performance returns are calculated by deducting the highest fee of 0.375% from the quarterly gross composite return. Composite was created on 4/2/07 with returns reflecting account minimums of $250k prior to 1/1/10, and $50k subsequently. Management fees are 1.5% from $50k to $250k, 1.4% from $250k to $500k, 1.2% from $500k to $1M, negotiated over $1M, and are dependent on the size and scope of the overall relationship. A complete list of composite descriptions is available upon request. Internal dispersion (Perf Disp) is calculated using the equal-weighted standard deviation of gross returns of those portfolios that were included in the composite for the entire period referenced.
Not all NPCA clients' funds are invested using AMAS. Strategy utilizes index-based exchange traded funds (ETF) attempting to maximize capital appreciation; bond ETFs are also used in situations where the strategy allocates equity ETFs for less than the entire amount of the account. NPCA's use of this equity strategy will vary by amount and percentage of each client's invested assets depending on client's investment objective, risk tolerance and overall suitability to equity investments in general. Strategy return data reflects dividends paid in cash and then reinvested under the following month's investment allocations for the strategy. The comparison uses the S&P 500 index data with cash dividends reinvested from the Standard and Poors web-site; there are no management, transaction, or advisory fees included in that index data. This index tracks 500 widely-traded large U.S. company stocks and is often considered to represent the total US equity market. Past investment performance is not necessarily indicative of future returns. Investments are not insured and may lose value. Securities recommended during this period available upon request. Tactical Allocation Ranges can change without notice at New Path's sole discretion.
News
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Contact Us
Office Location:
561 Blue River Parkway, Unit B
Silverthorne, CO. 80498
Mailing Address:
PO Box 24454
Silverthorne, CO. 80497
Phone: 970-468-0654
Fax: 970-468-0749