Right Cycle Investing is Evergreen Capital's trademarked description of the investment
management process we follow to manage a portfolio of Exchange Traded Funds (ETFs).
What is an ETF? An ETF is essentially a passive (unmanaged) portfolio of securities designed to
duplicate the performance of an index, such as the S&P 500 index. ETFs are the fastest growing subset
of the financial market. With the ETFs that are currently available, there is an index equivalent
investment product that represents most every sector of the market.
If constructed properly, we believe a portfolio of ETFs offer a significant cost advantage over
mutual funds and other managed products with embedded fees through:
Low cost
Competitive and negotiable
Tax efficiency
Generally do not make capital gain distributions
Real time pricing
Purchase and sell during trading day like a regular stock
Cost base
Net asset value on purchase date determines tax base
Liquidity
Highly liquid and arbitrage maintains market price close to net asset value
Target investing
Index-based alternatives track the entire investment spectrum
Diversification
Portfolios are generally inclusive of all securities in the index
Tracking error
Deviation of ETF from the index is nominal
WHAT IS RIGHT CYCLE INVESTING?
The short answer is that Right Cycle Investing is Evergreen Capital's "active" management of "passive" ETFs.
We believe the diversification and cost advantage of this product offer the average investor above average
performance opportunity over the long term. While we use various forms of analysis to allocate funds within
our ETF models, we are particularly guided by proprietary work we have done in analyzing mutual fund purchase
and sale activity. We believe many mutual fund investors are often their own worst enemy, failing to achieve
good relative returns due to chasing short-term performance. The result shows up in our mutual fund activity
analysis. We believe successful investing requires a long-term time horizon and commitment to a well-designed
and unemotional investing strategy. And that, in a nutshell, is what Right Cycle Investing is all about.
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