You Are the Only One Who Can Honor Your Life Choices
This afternoon my son had his Science Fair, and before school, I asked him how many parents were going to make it – it was scheduled for mid-day. He said less than half the kids reported that their parent would attend – they had to work.
We talked about the life I’ve created to be able to be at the fair. Saying YES with my eyes fully open and saying NO to things that take me off course. (With a fair share of yes and no in the wrong direction and later course correction.)
There was a time I traveled weekly, was taking calls and texting about work 24/7, and prioritized work over many other things a lot of the time. I had to do it. I had no choice. Or, then again, maybe I did have a choice but didn’t take responsibility for my life choices. Instead, I made up stories that defended and protected me from my constant go-go-go largely professional focus instead.
Are You Honoring Your Life Choices?
Four years ago, when we moved to Australia and moved to a small town in the Outback, life changed as did my business. Interestingly, my way of thinking about work vs. life did not make the leap with my body. I was still pushing for “success,” yet not really making choices that honored the life I said I wanted.
For the past few days, messages have been pouring in on LinkedIn congratulating me on my work anniversary; seven years of Break the Frame. What they can’t see in a status update is what’s going on behind the scenes or, more accurately, behind the screen.
One year ago, I had a medical diagnosis that forced me to make a decision about major, life changing surgery. It turned out that the decision became easier once it was a choice. I did more than make up my mind (made the decision)… The moment of choice I stepped into my power.
Still, it’s not easy.
It’s not easy to make life choices that you tell yourself other people would judge if they only knew about them. Choices that slowed down my success trajectory in exchange for simply living my life. For the first time in my adult life, I chose to work less, prioritized self-care and time with family outpaced my desire for a robust bank account and professional success… but I rarely talked about it publicly or wrote about it here. I was slowly but surely reframing my definition of success into one that consciously prioritized satisfaction.
Now, a year later, my brain is still catching up with my body, but things have changed.
- I chose to be at the Science Fair.
- For the past week, I chose to have live flowers in the house.
- For the past few months, I chose to up my commitment to the gym.
- For the past year, I chose not to travel for speaking, consulting or conferences.
- For the past four years, I chose to take my kids to school most mornings and pick them up in the afternoons.
Over the years I’ve worked with many clients who echoed words I have said far too often. They complained about their crappy projects or long hours and lamented that they had no choice. I’d ask,”Who’s forcing you? Who’s making your choice for you?” For the past year, I’ve been asking myself those same questions.
Choices, Ripples and Mindfulness
Some of the choices we make are small and others more significant. The things they share in common are ripples and mindfulness.
The ripples are the impact of our life choices that move beyond each one of us and mindfulness is taking responsibility for being present in your experience.
We need to be responsible not only for ourselves but our ripples. There is a movement that says we need to put ourselves first. However, you may wake up one morning only to discover that everyone else is gone. Mindfulness enables us to see our ripples and make choices that reflect beyond our bubble of one.
Mindfully choose happiness – it’s the ultimate success
Are You Choosing or Floating?
You and I, we can go through life like we’re on a raft on a roaring river being bounced about, holding on for dear life and moving forward (so it feels like progress) OR we can pick up the oars, get off the rapids and move with mindfulness, conscious choice, and whole-hearted intention.
Downshifting is a choice. Closing your business is a choice. Doing what you love is a choice. Being with people you love is a choice. Travel is a choice, and adventure is too. Creating a startup is a choice. Working late on a daily basis is a choice along with trillions of others.
Want to honor your life choices? Stop worrying so much about what others think.
One year after my first of several surgeries, the biggest and most important choice I’m making is to choose happiness. It’s time for my mind, body, and spirit to get into alignment. It’s time for a new chapter, and my son’s Science Fair is one of the pages I’m highlighting as I write my story.
I’ll be honest, what’s next is cloudy for me. I suppose that’s not something we’re supposed to admit or publish on a blog about personal leadership. However, I believe, it’s accepting those cloudy moments that creates the space for what’s next; resisting keeps us stuck.
Confusion precedes clarity. Keep exploring.
Building a Better Index With Strategic Beta
Written by: Yazann Romahi, Chief Investment Officer of Quantitative Beta Strategies and Lead Portfolio Manager of JPMorgan Diversified Return International Equity ETF at J.P. Morgan Asset Management
With the global economy warming up, but political uncertainty remaining a constant, it’s more important than ever for investors to position their global portfolios to navigate long-term market volatility. That’s where the power of diversification comes in, says Yazann Romahi, Chief Investment Officer of Quantitative Beta Strategies at J.P. Morgan Asset Management and Lead Portfolio Manager of JPMorgan Diversified Return International Equity ETF (JPIN).
Not all diversified portfolios are alike
In their search for diversification, many investors turn to passive index ETFs, which track a market cap-weighted index. But these funds aren’t always the most effective way to steer a steady course through volatile markets—and there are two key reasons why.
First, traditional market cap-weighted indices are actually less diversified than investors may think. For example, in the S&P 500, the top 10% of stocks account for half the volatility of the index. Within sectors, while you might assume that sector risk is distributed across the ten major sectors fairly evenly, it is a surprise to many that at any point in time, one sector can be as high as 50% of the risk.
Second, cap-weighted indices come with some inherent weaknesses, including exposure to unrewarded risk concentrations and overvalued securities. So, while these indices provide investors with exposure to the equity risk premium and long-term capital growth, as is the case with any other investment, investors can also experience painful downturns, which increase volatility and reduce long-term performance. For investors seeking equity exposure with broader diversification—and potentially lower volatility—strategic beta indices may be better positioned to deliver the goods.
How do we define strategic beta?
Strategic beta refers to a growing group of indices and the investment products that track them. Most of these indices ultimately aim to enhance returns or reduce risk relative to a traditional market cap-weighted benchmark.
Building on decades of proven research and insights, J.P. Morgan’s strategic beta ETFs track diversified factor indices designed to capture most of the market upside, while providing less volatility in down markets compared to a market cap-weighted index. Rather than constructing an index based on market capitalization—with the largest regions, sectors and companies representing the largest portion of the index—our strategic beta indices aim to allocate based on maximizing diversification along every dimension—sectors, regions and factors. The index therefore seeks to improve risk-adjusted returns by tackling the overexposure to risk concentrations and overvalued securities that come as part of the package with traditional passive index investing.
So, how do you build a better index?
As one of just a few ETF providers that combine alternatively-weighted and factor-oriented indices, our disciplined index methodology is designed to target better risk-adjusted returns through a two-step process.
First, we seek to maximize diversification across the risk dimension. This essentially means that we look to ensure risk is more evenly spread across regions and sectors, which balances the index’s inherent concentrations. As uncontrolled risk concentrations are unlikely to be rewarded over the longer term, we believe investors should strive for maximum diversification when constructing a core equity exposure.
Second, we seek to maximize diversification across the return dimension. Research shows that there are a number of sources of equity returns beyond growth itself. These include risk exposures such as value, size, momentum and quality (or low volatility). When creating a diversified factor index in partnership with FTSE Russell, we seek to build up the constituents with exposure to these factors. We therefore select securities through a bottom-up stock filter, scoring each company based on a combination of these return factors to determine whether it is included in the index. These factors provide access to a broader, more diversifying source of equity returns as they inherently deliver low correlation to one another, providing diversification in the return dimension.
So, whereas traditional passive indices allow market cap to dictate allocations, the diversified factor index seeks to ensure that we minimize concentration to any source of risk—whether it be region, sector or source of return.
How are you currently weighted versus the market cap-weighted index, and how have your under- and over-weights enhanced risk-return profiles?
Crucially, our weightings don’t reflect specific views on sectors or regions and are instead, by design, the point of maximal diversification. It is important to remember that market cap-weighted indices typically carry a lot of concentration risk—for example, at various points in time, a single sector can explain half the risk of the index when left unmanaged. At the moment, three sectors explain two-thirds of the risk of the FTSE Developed ex-NA Index—these being financials, consumer goods and industrials. In contrast, the FTSE Developed ex-NA Diversified Factor Index—or strategic beta index, which JPMorgan Diversified Return International Equity ETF (JPIN) tracks—is explicitly designed to maintain balance and therefore these sector allocations range from 8% to 12%. In the short term, any concentrated portfolio can of course outperform a more diversified one, if the concentrated bet paid off.
Investing wholly in a single stock may outperform over short-term periods. At other times, it may significantly underperform an index. However, it is well understood that an investor is better off diversifying across lots of stocks for better risk-adjusted long-term gains. The same applies here. From a pure return perspective, if financials, for example, account for half of a cap-weighted index in terms of market cap and have a strong run over the short term, of course, this index would outperform over this period. Over the long run, however, it is fairly uncontroversial to suggest that the more broadly diversified index could achieve better risk-adjusted returns.
Seeking a smoother ride in international equity markets?
For investors targeting enhanced diversification through a core international equity portfolio, JPMorgan Diversified Return International Equity ETF (JPIN) targets lower volatility by tracking an index that more evenly distributes risk, enabling them to get invested—and stay invested.
Learn more about JPIN and J.P. Morgan’s suite of strategic beta ETFs here.
Call 1-844-4JPM-ETF or visit www.jpmorganetfs.com to obtain a prospectus. Carefully consider the investment objectives and risks as well as charges and expenses of the ETF before investing. The summary and full prospectuses contain this and other information about the ETF. Read them carefully before investing.
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