Mr. Osbon: Osbon Capital is a registered investment adviser. We call ourselves "the index boutique" because we deal with a small number of clients, all individuals by design, and we use only index-based investments for tax efficiency and cost control. Our specialty is what I would call "goal-oriented wealth management," rather than beating markets and things like that. Our plan is to come up with the best possible route for you to reach your financial and investment goals.
TWST: Talk a bit more about the index strategy and why you follow it.
Mr. Osbon: The index - and we use ETFs, exchange-traded funds, to implement our investment strategies - allows us to invest anywhere in the world in any asset class. ETFs have come of age, and we can access any market we want, but we use them for three reasons. One is tax efficiency - it is very important for individuals to measure returns in after-tax components. And with ETFs, you own your own basis, so you control your tax destiny. They're very tax efficient. Second is cost control. You can make money two ways, by increasing returns or by cutting costs. We do both. They're very cost-effective, and there are very incremental costs in using ETFs. And the third is the most interesting: It's been shown both in theory and fact that index funds will beat active managers 80% of the time, and the longer the time period, the more likely they are to beat them. And on an after-tax basis, it's not even close. So when you use index investment, automatically you're above average, and you are probably at about the top fifth of all money management performers.
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