What has Your Advisor Done


Anyone can manage money when the markets are going straight up. Tactical investment management really stands out when markets are challenging.

The last twelve months have forever changed how all of us will live our lives. Trying times provide you better insight into the people around you. Did your financial advisor show you their thought leadership, provide you assurance that everything would be alright, and provide you confidence of their strength of knowledge? Or did they bend under the pressure and not meet your expectations?

When there is adversity in the markets, I always remind my team, “This is when we shine.” I reiterate that, “Anyone can manage money when the markets are going straight up. Tactical investment management really stands out when markets are challenging.” And then we go to work, proactively managing our strategies and telling our clients what we are doing to protect their portfolios from whatever adversity is occurring.

I love the challenge of navigating my way through challenging and difficult markets.

Maybe this makes me a bit perverse, or perhaps you might think that I’m a glutton for punishment. Market adversity has never stressed me out. I’ve always believed that, “You can only control what you can control.” That might sound like a strange statement, but what can we really control? We can control our emotions. 

We can control how hard we work. We can control the messaging that we present to others. As the Chief Investment Officer, I can control the amount of risk we are taking in our portfolios. I can control how much exposure we have to different parts of the market. I can even control the names we invest in… but I can’t control how or when the markets go up or down. I also can’t control the volatility in the markets.

I can think strategically about what is happening, why it’s happening, and size up if the current adversity to the market is a real threat to our portfolios or just temporary noise. Only an arrogant fool would believe they know exactly where the markets are heading or they are in complete control of their portfolios. So, we choose to control what we have the ability to control, and let the other stuff roll off our backs. This allows Polaris Wealth to be clinical and decisive with how we Tactically manage your portfolio.

What Has Polaris Wealth Done for You?

  • We put into place a disaster preparedness plan for COVID before the shelter-in-place orders were given. This allowed all Polaris Wealth employees to work from home as efficiently as they could from their Polaris Wealth office.
  • We held approximately 3,000 virtual client appointments.
  • We have sent out 14 Polaris Perspective educational emails, including six Polaris Perspectives, keeping you informed about what we were doing with your portfolio during the onset of the coronavirus pandemic.
  • We held four webinars, educating you about what had happened in the markets, how we had managed it, and what we saw in the upcoming months.
  • We initiated a weekly podcast. We have recorded 22 podcasts for your listening pleasure.
  • Most importantly, we navigated you through the most unimaginable 12 months in the stock market.
  • Polaris Wealth outperformed its benchmark in all of our eight stock strategies.

Rarely will you hear me bragging about our firm’s strategy performance. I’m not sure if it’s my Midwest upbringing or the fact that no investment advisor can have top-tier performance at all times (see our articles on performance persistency). But given everything that has gone on over the past twelve months, I need to brag about the investment team and the amazing work that has been done for you by this group.

  • Polaris Wealth runs eight stock strategies. All eight stock strategies beat their benchmarks over the past 12 months.

Rising Dividend Growth and Income

This is Polaris’ flagship strategy. There are more clients in this strategy than any other strategy we manage.

The first strategy that we will be highlighting is the Rising Dividend Growth and Income strategy. This is Polaris’ flagship strategy. There are more clients in this strategy than any other strategy we manage. This is a balanced strategy that typically hovers around 60% equity, with the residual in bonds or cash. 

We have the discretion to go up as high as 80% equity when the market risk seems low, or down as low as needed if risk increases. We took the Growth and Income strategy down to 30% equity during the waterfall drop in the markets in March 2020, protecting clients from significant losses in their portfolio.

Below is the statistical breakdown of the Growth and Income strategy. Talking about performance and only performance is not enough. How much risk did we take with your portfolio to get those returns? Did the risk pay off? How well did we protect you against the downside of the market, and were we able to beat the markets on the way up? Did our investment selection add value, or did we act more like an index (or the benchmark)? This is how you know that we added value.

  • Polaris Wealth’s Rising Dividend Growth & Income strategy almost doubled the performance of its benchmark, providing a 28.30% net of fee return over the past twelve months, versus its benchmark, which provided a 15.35% total return.

Standard deviation shows how much risk an investor took to get their returns. You can see that our strategy had a lower standard deviation than its benchmark, thus took less risk (approximately 12% less risk). Alpha shows “risk adjusted” returns. A positive alpha is amazing, let alone an alpha of 14.21%. This means that we brought 14.21% of risk-adjusted outperformance over the past 12 months. Beta indicates the correlation to our benchmark. A beta of 0.76 is very low, since our portfolio is made up of stocks and bonds, and so is our benchmark. The upside capture and downside capture ratios are just as they sound. You want an upside capture above 100% and a downside capture below 100%. As you can see from above, you are getting your cake and eating it too. 

We protected our clients from 33% of the downside of the markets and went up 122% of our benchmark when things recovered. The best quarter and worst quarters are as they sound; however, the portfolio’s best/worst quarter don’t have to have the same timeline best/worst quarter as their benchmark. R-squared is a statistical measurement that tries to explain how much of a strategy’s performance can be measured by the movement of its benchmark. An R-Squared reading of 100 would mean that all of the performance of that portfolio was attributed to investing just like the index or benchmark being compared. An R-Squared reading in the 70s is amazing. It means that a significant portion of this strategy’s performance was due to our investment selection. We aren’t a closet index strategy.


To summarize, the Polaris Wealth Rising Dividend Growth and Income strategy has provided almost twice the return as its benchmark, while taking less risk.

It’s captured 120% of the upside of the benchmark, while protecting investors from 33% of the downside. We’ve provided over 14% annualized risk-adjusted performance, net of all costs to our clients. And we’ve provided this result by incredible investment management selection and a low correlation to our benchmark. I’m not sure what more we could do on behalf of the clients that are investing in this strategy.

Polaris Global Growth

As the name states, the Global Growth strategy invests in companies all around the world. While the strategy has a dividend paying bias, we can invest in any company the investment committee believes in the most. While this strategy is typically 100% invested at all times, we can lower the Global Growth equity exposure as low as we feel is necessary to protect our clients. In the midst of the February/March COVID drop, we lowered our equity exposure to 48% stocks.

  • As you can see from the statistics, we have outperformed our benchmark by 9.4%, while taking 25% less risk. Our alpha is an astonishing 15%. While the strategy didn’t outperform its benchmark during the recovery, it almost matched it. Our outperformance came from providing amazing downside protection. Again, our choice to go heavily into cash and our individual stock investment selection provided a low correlation to our benchmark and a fantastic R-Squared.

Polaris Focused Value

The Polaris Focused Value strategy is a five-star Morningstar strategy, with performance in the top 1% of all large-cap value strategies over the trailing 1, 3, and 5 years, and since inception.

Like all Polaris Wealth Strategies, the Focused Value strategy is tactical. While the Focused Value strategy remains fully invested at all times (it can take a 10% cash position), it repositions its equity positions into defensive securities to protect against market pullbacks.

  • As you can see from the chart above, Focused Value almost tripled the performance of the benchmark, net of all fees. It provided an astonishing 33.30% alpha. It provided these results by showing investors amazing downside protection and upside capture. While the beta and R-Squared figures are higher than the other strategies, they are still providing investors lower correlation and value than their benchmark.

All Polaris Wealth Stock Strategies

Below is a list of our stock strategies and how they have performed over the past twelve months. We could not be prouder of our results. If you would like to learn more about any of these strategies, please reach out to your investment advisor at Polaris Wealth.

As we discussed in our last Polaris Perspective educational piece The Value Tide is Rising, we believe that the value market has a lot more room to run, but we do believe that it will be a stock picker’s market. Not all value stocks will do well. And most of the growth companies that led the charge in 2020 got ahead of themselves. They are fundamentally expensive. We believe that 2021 will be a banner year for our clients at Polaris Wealth. 

If you would like Polaris Wealth to give you a second opinion on other investments that are held away from us, we’d be happy to provide you a comprehensive evaluation to see if we could improve upon your results. And as always, please feel free to share this article with anyone that you think might be interested or could benefit from being introduced to Polaris Wealth. We will provide them the same high level of service and portfolio management results that you have come to expect from us.