Commentary | Feb 07, 2020

Neither Fish nor Fowl


According to, the idiom “neither fish nor fowl” describes something that is “Neither one thing nor another; not belonging to any suitable class or description; not recognizable or characteristic of any one particular thing.”

Our GTAA portfolios can exhibit significant changes in terms of their exposure to various asset classes. At times they are invested primarily in stock indexes, while at other times they are invested primarily in bonds or in a balanced portfolio of both asset classes. This chameleon-like feature means that our GTAA mandate defies conventional classification.

How We Differ

We often tell our clients that where traditional managers are active, we are passive, and that where they are passive, we are active.

Traditional investment managers typically achieve their stock and bond exposures by taking positions in individual stocks and bonds, with the goal of identifying outperformers. Interestingly, the vast majority of professional stock-pickers underperform their benchmarks over the long-term. Conversely, our GTAA strategy refrains from picking individual stocks and bonds, but rather invests solely in ETFs that track broad-based stock and bond indexes.

Our GTAA mandate also differs in its approach to asset allocation. Traditional portfolios maintain a static, “set and forget” posture; once an investment advisor/manager determines an appropriate asset mix for a client (i.e. 60% stocks/40% bonds), this balance is generally not altered, regardless of changes in the investment environment. In contrast, our GTAA strategy dynamically alters its allocations to the stock and bond markets of various countries in response to changing market conditions.

Focusing on What Really Matters

The choice of individual securities in a portfolio accounts for a very small portion of the variability of the portfolio’s returns. Rather, it is the portfolio’s asset mix that accounts for the lion’s share. There was practically no amount of stock picking expertise that would have saved an investor from suffering severe losses in 2008; portfolios that had a significant allocation to stocks suffered severe losses. The key to preserving capital was to not have owned stocks (or at least to have had only a small allocation to them). Similarly, during the recovery of 2009, the key was not to ascertain which specific stocks to invest in, but rather to have a significant exposure to stocks in general.

Given that asset allocation is far more important than picking individual stocks/bonds (especially when it comes to protecting clients from severe losses in bear markets), it follows that at OWM, we focus on what really matters. Our focus on asset allocation has proven valuable since we launched in May 2017. While we participated in the positive markets of 2017, we successfully protected capital and diversified our clients’ portfolios during the challenging markets of 2018.

A Part of One’s Core Portfolio

Our GTAA strategy has demonstrated the ability to achieve efficient exposure to global stock and bond markets while protecting clients from severe losses in bear markets. These characteristics have and should continue to enable our clients to compound their investments more effectively over the long-term.

Thus, our GTAA mandate is neither fish nor fowl, but should be regarded as an essential part of one’s core portfolio.