The Future of Investing is Calling

By Clay Brethour, CFA

For the past 20 years, I have worked in the mutual fund industry in various capacities: equity analyst, portfolio manager, and recently, as the President of a mutual fund company. The primary investment trend of one of the funds I co-managed, Buffalo Discovery, was to find innovative companies, those that were disrupting legacy companies in providing what the end markets desired. Often innovative companies develop a product before the end market even knows that it wants it; case-in-point, Steve Jobs’s visionary development of the iPhone.
Since entering the investment industry in 1992, I have never experienced a dull moment in the market. The changes in the overall industry have been significant, but when examining the investment vehicles available to individuals, the advancements in technology haven’t translated into significant improvements for managing individual investors’ wealth.

Mutual funds have remained essentially unchanged over the past several decades. It is hard not to compare the investment management industry to the transformation of communication devices over the years. Mutual funds are like the long-lived rotary phone. Having both managed mutual funds and been personally invested in those funds, even I shook my head at the ongoing inefficiencies: unwanted capital gains distributions, dilution of income growth, and the requirement of only being able to transact in a mutual fund at the market close seems to highlight the archaic nature of the product.

The industry is now coming out with active share exchange traded funds (ETFs) that are semi-transparent, to hopefully extend the relevancy of the mutual fund investment product, which is similar to the emergence of the pager. There is no doubt that ETFs have allowed individuals to get broad market exposure for relatively low cost, but in my opinion, for individuals utilizing an investment advisor to allocate their resources over a mix of ETFs, the overall costs to the individual saps total return. If individuals knew the minimal amount of time it takes to develop an ETF allocation strategy, they might question the value of the management fee charged by the investment advisor.
The legacy investment management firms are trying to embrace innovation in a similar way to a company I remember from the mid-90s called VoiceNow. Not only did they have a pager service, but they launched a product that combined the ability to get a numeric page and allow the user to listen to voice mail. Although it was touted as revolutionary and launched with much fanfare, after a year or so, the company was placed in the annals of products that never worked. The mutual fund industry is headed to their “VoiceNow” moment. They continue to slightly alter their products to try to remain relevant, but they are falling short of true innovation.

The real innovation coming to the investment management industry, similar to Steve Jobs’s iPhone, is direct investing. The asset management industry is ripe for disruption, and I believe that direct investing and direct indexing will revolutionize the investment industry for those adept at incorporating technology and industry experience in providing investors with an investment vehicle that eliminates the inefficiencies of both mutual funds and ETFs.

This potential for innovation is what led me to found Maclura Investments. I wanted to build an investment management firm from the ground up, investing for others in a way that I would want my personal capital to be invested. I decided to launch Maclura Investments in April 2020 while the world was in the midst of the COVID-19 pandemic. While some might think this is an odd time to start an investment management firm, I saw a significant opportunity to bring to the market a new way for individuals to manage their wealth. Maclura Investments implements a process that creates a customized portfolio of premium growth companies for each client depending on where they are in their wealth building and preservation journey, allowing better tax optimization, full maximization of income growth, and overall lower costs to the individual investor. All this at a lower minimum account size ($100,000) than most investment management firms are willing to accept. This process is appropriate for both taxable and tax-deferred accounts.

We are dedicated to helping our clients build and preserve their wealth through direct ownership in a well-diversified group of premium companies. Our process seeks companies that screen favorably in our Maclura Foundational Factors: strong drivers for revenue growth, formidable competitive position, effective commercialization strategies, scalable business models, and superior capital allocators. We do this at a reasonable cost to the investor, passing on economies of scale as each individual’s wealth increases. Contact us today about upgrading your investments to the model of the future.

Maclura Investments, LLC is a registered investment advisor located in Lenexa, Kansas. Additional information about Maclura Investments and its services provided can be found at maclurainvestments.com.