Frequently Asked Questions
1) What is Free World Investment (FWI) in short?
Free World Investment (FWI) is dedicated to safeguarding global capital in developed markets from investing into countries with heightened political and country investment risks. It performs due diligence research into global companies regarding their involvement in repressive regimes, such as People’s Republic of China, Russia, Iran, North Korea, Cuba, and Venezuela.
2) What is Free World Efficient Growth (FWEG) portfolio?
The Free World Efficient Growth (FWEG) portfolio is comprised of companies which do not have evident presence or interest in repressive countries while providing stable growth opportunities for investors. The FWEG portfolio derives from the Efficient Growth portfolio offered by Running Oak Capital, which focuses on outperforming the S&P 500 over a full economic cycle with less downside risk. Based on the original portfolio, the FWEG portfolio includes an additional screening accomplished by the “FWI Scoring System”, which assesses the country investment risk of companies.
3) What is Running Oak Capital (ROC)?
Running Oak Capital (ROC) is a registered investment advisor in the United States. It is founded upon the proven Efficient Growth strategy which was developed over 40 years ago. It is a rules-based strategy, ensuring a disciplined, unemotional approach to equity management. It has historically delivered strong risk-adjusted returns by focusing on quality growth companies that are undervalued by the market. As of December 2023, ROC has approximately $530 million in Assets Under Management (AUM).
4) What is the relationship between Running Oak Capital (ROC) and Free World Investment (FWI)?
Running Oak Capital (ROC), doing business as Free World Investment (FWI), is a registered investment advisor in the United States. The FWI’s FWEG portfolio is built upon the Efficient Growth portfolio offered by ROC with additional screening accomplished by the “FWI Scoring System”. Together we offer a unique investment portfolio that provides an ethical and stable growth opportunity which focuses on outperforming the S&P 500, while minimizing the exposure to the geopolitical risks from investing into repressive regimes including the People’s Republic of China and Russia.
5) What is the past performance of Free World Efficient Growth (FWEG) portfolio?
The Free World EfficientGrowth (FWEG) has outperformed the S&P 500 Equal Weight Index, net of fees. Net returns for the FWEG strategy as of November 30, 2024 is listed below:
Year-To-Date:
Free World Efficient Growth (FWEG), (Net): 28.25%
S&P 500 Equal Weight Index: 20.56%
1-Year Performance:
Free World Efficient Growth (FWEG), (Net): 33.76%
S&P 500 Equal Weight Index: 28.83%
Since Inception on June 1, 2022 (annualized):
Free World Efficient Growth (FWEG), (Net): 16.47%
S&P 500 Equal Weight Index: 11.81%
6) What are the main advantages of investing in Free World Efficient Growth (FWEG) compared to mutual funds or ETFs?
Investors’ funds into the FWEG portfolio will be held into a Separately Managed Account (SMA), a portfolio of securities managed for the investor alone. As opposed to equity mutual funds or ETFs with indirect stock ownership, the FWEG investor directly owns the stocks in the investor’s own SMA account. In other words, the major advantage of SMAs is greater transparency. The investor can see every stock in the portfolio and every transaction the portfolio manager makes, as well as can monitor the market value and performance of the portfolio in real-time.
The FWEG portfolio is an ethical investment strategy that focuses on minimizing geopolitical risks by refraining from investing in repressive regimes accomplished by the “FWI Scoring System”. This differentiates it from most other investment strategies. It also adopts a long-term investment approach with professional portfolio management that aims to outperform the S&P 500 over a full economic cycle with less downside risk.
7) Does the investor have full ownership of the Separately Managed Account (SMA)?
Yes. The client owns the account and can log in at any time, see what the account is invested in, and even liquidate it.
8) How does it work?
I. Running Oak Capital (ROC) uses a disciplined, rules-based approach to select U.S. stocks for the Efficient Growth portfolio, with the objective to outperform the S&P 500 over a full economic cycle and do so with meaningfully less risk. The philosophy is based on 3 simple and dependable economic principles: above-average earnings growth, attractively valued companies, and lower downside risk.
II. Free World Investment (FWI) performs screening with due diligence to select companies from the ROC’s Efficient Growth portfolio. Under the research methodology accomplished by the “FWI Scoring System”, FWI creates the Free World Efficient Growth (FWEG) portfolio inclusive of companies which do not have evident presence or interest in repressive countries, such as the People’s Republic of China, Russia, Iran, North Korea, Cuba, and Venezuela.
III. The investor opens a separately managed account (SMA) in a custodian firm, such as Charles Schwab or Interactive Brokers, and transfers funds into the account.
IV. ROC executes trades in the investors’ SMA account to invest in U.S. stocks based on the FWEG portfolio.
V. ROC and FWI will continue to manage the account and execute trades subject to constituent changes in the FWEG portfolio.
9) What are the roles of custodian firm (i.e. Charles Schwab) and Running Oak Capital (ROC), and their relationship with the investor?
Charles Schwab is the custodian firm which holds the client’s assets. Running Oak Capital (ROC) is the portfolio manager, who manages the client’s assets by trading stocks on Charles Schwab’s platform.
10) Are there any other fees due to custodian firm (i.e. Charles Schwab) apart from the Free World Efficient Growth (FWEG) portfolio management fee?
No. There are no additional fees.
11) Are there any buy or sell fees?
No, most custodian firms, including Charles Schwab, have waived all transaction fees.
12) Is there a minimum commitment period for the investment?
No. However, as a long-term wealth management strategy, a period of over 2 years would likely be recommended. With the market fluctuation, it is hard to predict what the market will do over shorter time periods. If cash is needed short-term, it is almost always best to keep that money in cash.
13) I am currently enrolled in an individual retirement account (IRA) / Roth IRA / 401(k) plan. Can I invest in the Free World Efficient Growth (FWEG) portfolio?
Yes. You can invest in FWEG under your individual retirement account (IRA) or Roth IRA. If you have a 401(k) plan associated with a previous employer, you can transfer the funds to a Rollover IRA and invest in FWEG. If the 401(k) plan is sponsored by the current employer, you may transfer the funds only if the employer allows in-service rollover and invest in FWEG.
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