The NAOI has designed Dynamic Investments (DIs) and Dynamic Portfolios to provide amazing benefits for both individual investors and for the financial advisors and organizations that exist to serve them. On this page are listed just a few of the benefits that financial advisors and investment developers/vendors will take advantage of by using Dynamic Investments. The amazing benefits for individuals are found at this link.

DI Benefits for Financial Professionals

1. A Significant Increase in Market Size

The NAOI created Dynamic Investments to give individuals investors the confidence they need to enter the market. The fact that DIs provide higher returns than MPT portfolios with lower risk and absolute protection from market crashes will bring thousands, if not millions, of people into the market who are now on the sidelines in fear. While individuals can implement and manage DIs on their own using an online broker, the NAOI knows that most would prefer to work with a financial advisor that offers them. Advisors who integrate DIs into their product offerings will see the size of their market grow substantially.

2. Gain a Massive Competitive Advantage in a Crowded Field

NAOI students tell us that today all investment advisors and financial organizations look alike to them; none holds an obvious competitive advantage. This perception changes with the introduction of Dynamic Investments. Organizations that offer high performing DIs and Dynamic Portfolios will stand out in a crowded field and own a major competitive advantage in the crowded field of financial services. Individual investors in large numbers will seek them out.

3. Offer Superior Products

Dynamic Investments and Dynamic Portfolios can produce returns that are consistently higher than MPT portfolios in all market conditions and with lower risk. It is not uncommon for DIs to average annual returns of 20%+ over an extended time period. Traditional MPT portfolios, even in the most bullish markets, struggle to earn 7%-10% per year and with higher risk. Financial organizations that offer higher-return, lower-risk DI products will attract more clients and increase revenues. It’s just that simple.

4. Open New Revenue Streams without Disruption to Existing Ones

An organization that offers DIs does not need to abandon current portfolio products or methods. The NAOI does NOT advocate abandoning MPT portfolio and methods. DIs can be used as building blocks in traditional MPT portfolios; making them market-sensitive and capable of producing higher returns with lower risk. Used in this manner, DIs open new revenue streams without disrupting current ones.

5. Ease of New Product Creation

Creating new mutual funds and ETFs is a time-consuming and expensive process. In contrast, DIs are created by simply combining existing ETFs in the DI structure . By embracing this new approach, investment developers can easily double or triple the size of their product line virtually overnight with superior products that will be much in demand by both institutional and public investors. The NAOI offers DI Design Classes as discussed at this link.

6. Monetize ETF Combinations - Uncover Hidden Value in Existing Product Lines

DIs monetizing the combination of existing ETFs. By doing so, massive value that is lying dormant in current ETF product lines is uncovered. As a quick example, an ETF vendor that has in its product line a Total Stock ETF and a Total Bond ETF can create value by combining them in the Dynamic ETF Pool. This increase in value is illustrated by the returns of such a DI as shown below for the period from 2008-2018.

• Total Stock ETF Average Annual Returns (AAR): +9.0%

• Total Bond ETF AAR: +6.4%

• Dynamic Investment that uses both of the above ETFs AAR: +15.1%

By simply combining existing ETFs in the DI structure an entire new product line of superior investments can be created virtually overnight.

7. Increase Sales of Risky ETFs

ETFs that track Sectors, Industries, Countries and other narrowly focused areas of the market can be very risky. They are not suitable for most MPT, buy-and-hold portfolios. This risk is greatly reduced by placing these ETFs in the DEP of a Dynamic Investment along with a Bond ETF and a Stock ETF. The focused ETF is then bought only when its price is trending up more strongly than Stocks or Bonds and it is sold quickly if its price falls significantly . By taming the risk of Sector ETFs, sales of narrowly focused and often low-volume ETFs will soar.

8. Expanded Markets and Easier Sales

DIs are comprehensive portfolio “products”, specifying not only the ETFs to work with but also how to manage them on an ongoing basis. And they are so simple that investors can implement and manage them on their own if they wish using an online broker. As a result, DI developers and vendors can mass-market them directly to the public via the DI Product Catalogs. Because DIs are self-managing products that investors simply buy and hold while periodically looking for trade signals, ETF developers can sell them directly to the public; opening a massive new market.

9. Easier Portfolio Creation and Management for Advisors

Designing MPT effective MPT portfolios is difficult at best. The designer must take into account the investor’s risk profile and then select equities from hundreds of choices. Then the portfolio manager must determine when to rebalance the portfolio. A DI designer’s job is much simpler. He/She simply defines groups of equity candidates to place in a DI’s Dynamic ETF Pool (DEP) and then lets the market decide which to purchase based on a periodic sampling of the price trends of each. And with DIs there is no rebalancing required. This evolutionary change in investing blends the most effective elements of subjective and objective decision making, resulting in higher performance portfolios with far less effort.

10. A New World of New Product Development Opens

DIT opens a vast and virgin field of new investment product research and development. To fully exploit the potential of this opportunity, the NAOI has created a DIT Development Platform and offers NAOI Development Partnerships as discussed at this link. Dollars spent on R&D here will have a far greater ROI than dollars spent trying to create new ETFs, mutual funds or any other traditional investment type.

NAOI Seminars, Classes, Consulting, Partnerships and More

In order to take full advantage of the power of Dynamic Investments and Dynamic Portfolios the NAOI offers to the financial services industry the following resources:

• The “Introduction to Dynamic Investments and Market-Sensitive Portfolios” book that can be purchased in the NAOI Store.

• Dynamic Investment Seminars and Design Classes as discussed at this link.

• Consulting to show organizations how to use Dynamic Investments to meet their specific needs and goals as discussed at this link.

• Research Partnerships as discussed at this link.

Contact Us

Contact Leland Hevner directly at LHevner@naoi.org to discuss these resources and to suggest other forms of cooperation.