New Frontier Advisors CIO Michaud on Managing Risk and Return

At February’s Exchange conference, New Frontier Advisors Chief Investment Officer Robert Michaud talked about his firm and the coming market challenges.

“We are a firm that was founded based on a research idea for doing portfolio optimization better — building more diversified portfolios, and managing the risk and return trade-off for an uncertain future,” he shared.

Leveraging Technology and ETFs

Michaud noted that New Frontiers built technology that examines thousands of future scenarios to help build a robust portfolio. New Frontiers was also quick to seize on the ETF wrapper. “We were thrilled to be part of this revolution,” he said. The ETF wrapper has continued to grow in popularity due to its ease of use and low cost.

New Frontier Advisors on Balancing Risk

“The way that you need to invest is never fixed in stone,” Michaud added.

As investors look to manage risk, the variables are always changing. Today’s markets has challenges of higher interest rates, which changes the risk and reward landscape for some investments. Michaud expressed that the challenge of putting together a portfolio is weighing whether to allocate into something safe that is likely to bring a return now, or something riskier that could have a higher return in the future.

“When you think about how a conservative investor wants to invest and what portfolio is appropriate for them, that’s a very different answer than how an aggressive investor may want to invest because they could be more willing to accept some of these risks,” he explained.

On Single-Scenario Betting

Discussing common investor mistakes, Michaud pointed to betting on a single scenario. “Whatever that scenario is almost doesn’t matter, because the market is aware of it, and if you are overconfident of it, then you are ignoring other risks.”

For instance, Michaud believes it’s important to build a portfolio not for one possible future, but for thousands.

New Frontier Advisors at Exchange

Exchange continues to provide Michaud with actionable information. New Frontier Advisors was an early adopter of the ETF. The Exchange conference represents a way to stay plugged into the new ETF innovations.

“Not every asset class has been solved; not every way of getting exposure to a risk premium and diversifying portfolio risk has been figured out,” he said. “As time goes on, we keep coming back to see the new innovations in ETFs.”

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