A Distinctive Risk-Managed Equity Strategy
Jerry Miccolis is the chief investment officer of Giralda Advisors LLC and the lead portfolio manager of The Giralda Fund (GDAMX) and Giralda Risk-Managed Growth Fund (GRGIX). He maintains a focus on applying innovative risk management techniques with a goal of delivering long-term capital appreciation to investors while also protecting against the effects of adverse market conditions.
Jerry has more than four decades of experience in the risk management, actuarial, and investment management fields, and he shares his expertise through various publications, speaking engagements, and as the co-author of the book Asset Allocation For Dummies®. Prior to joining Giralda Advisors, Jerry was a principal at Brinton Eaton Wealth Advisors and, prior to that, a principal and global practice leader of the enterprise risk management (ERM) consulting practice at Towers Perrin.
Jerry has a bachelor’s degree in mathematics from Drexel University. He holds the Chartered Financial Analyst® designation, is a CERTIFIED FINANCIAL PLANNERTM practitioner and is a fellow of the Casualty Actuarial Society (FCAS). He is also a Member of the American Academy of Actuaries, the Financial Planning Association (FPA) and the New York Society of Security Analysts (NYSSA). He received the Chartered Enterprise Risk Analyst® certification for his pioneering work in the ERM field. He has chaired several professional committees and is a widely quoted author and speaker on the subject of strategic risk management, investment management, and their interaction.
I spoke with Jerry on May 9.
You have two funds - The Giralda Fund (GDAMX) and Giralda Risk-Managed Growth Fund (GRGIX) – that were introduced approximately five and two years ago, respectively. What is the history of your firm and what led to the introduction of those two funds?
Giralda Advisors was born inside of a wealth management firm, Brinton Eaton Wealth Advisors, based in New Jersey. We created the original flagship fund, The Giralda Fund, for Brinton Eaton’s wealth management clients for their exclusive use. We developed a risk-managed equity strategy for them, and it turned out that the most efficient way to deliver it to them was through a ’40 Act fund, so we created one in the summer of 2011. We ran it solely for those clients for a number of years.
The fund (GDAMX) established a solid track record over the years. It was doing well against its objectives. We knew based on conversations with other wealth advisors that there would be some interest outside of Brinton Eaton, so we later launched the separate fund, the Giralda Risk-Managed Growth Fund (GRGIX), for that potential audience.
The only difference between the two funds is the fee structure. In the original fund, GDAMX, since it was launched within a wealth management firm, the management fee within the fund was waived for Brinton Eaton clients. For outside clients, clearly we did want to charge a management fee. You can’t have two share classes within a single fund that charge two different management fees, so we created the clone fund, GRGIX, for that purpose.
Giralda Advisors is the investment advisor to both funds. It was created as a spinoff from Brinton Eaton and is now a separate entity.
Giralda’s tag line is risk-managed investing. What does that mean?
We provide exposure to domestic large-cap equities and add several layers of downside risk management. More specifically, there are two types of risk that you face with equities. One is recurring bear market risk and the other is a sudden, “nobody saw it coming” market crash. The 2000-2002 period is an example of the first and 2008 is an example of the second. We have two different types of risk management devices to address each of those equity-market risks, respectively.
What sent you down the road of risk-managed investing?
We were at Brinton Eaton Wealth Advisors in the wake of the 2008-2009 market crash. Our clients needed to be in equities for their long-term financial health, to make their financial plans work and keep them ahead of inflation. But many clients who needed to be in equities were now afraid of doing so.
We set about finding a way to keep them in equities and allow them to sleep at night. We spent over a year looking for solutions in the market, doing our own research and analysis, and ultimately developed our own strategy, to allow clients to stay in equities but attempt to mitigate the most dangerous of those downside risks.