While many brokers and investment advisors talk at length about the “art” of investing, at 3 factor, we share a conviction with world-class institutional investors and Nobel Laureate finance academics that long-term investing is a science.  The investment approach at 3 factor is informed by the leading research on portfolio asset allocation, investment selection, and on-going portfolio management.

At 3 factor, we take a holistic view of our clients’ goals and of their portfolios.  Many of our clients have large, low-cost basis stock positions and illiquid holdings which we factor into their customized portfolio design, so that their 3 factor accounts form part of a “Total Portfolio” asset allocation.

Where the invest­ment advi­sory indus­try stops, we begin.

Far beyond sim­ply buy­ing and hold­ing an assort­ment of index funds and ETFs, 3 factor seeks to get supe­rior per­for­mance through systematic re-balancing; advanced tax engineering and low fees.

3 factor Engine


Crucial to the on-going            3 factor portfolio management work is the 3 factor Engine™ – our proprietary software built on thousands of hours of research and coding.  While even the best financial advisors typically look at portfolio re-balancing and capital gains and loss tax issues annually or perhaps quarters, by employing the 3 factor Engine™, we can monitor client portfolios continuously looking for small opportunities to improve returns.   Given the power of long-term compounding of these small advantages, 3 factor can help our clients build substantial portfolio value over time.

Our research has shown that over the past 15 years, the tax sen­si­tive re-bal­anc­ing tech­niques and low-cost advantages that we offer would have added sig­nif­i­cantly to the value of a client’s port­fo­lio. For exam­ple, a client start­ing with $2M would have ended up with an extra $771k in her port­fo­lio1.

Systematic Re-Bal­anc­ing

Systematic Re-Bal­anc­ing is the term used by 3 factor for a num­ber of portfolio re-balancing techniques, each based on leading aca­d­e­mic and indus­try research, which we have con­firmed adds after-tax value for clients who have a sig­nif­i­cant por­tion of their assets in tax­able accounts.

Advanced Tax Engineering

The cornerstone of the 3 factor advanced tax engineering approach focuses on individual tax lot accounting and tax-loss carry-forwards. Through the 3 factor Engine™, we are able to continuously monitor client portfolio for opportunities to sells positions that have declined in value in order to min­i­mize cur­rent taxes or “carry for­ward” a tax loss. We sys­tem­at­i­cally uti­lize this approach, as our own analy­sis and back-testing has val­i­dated the aca­d­e­mic find­ings on the value of tax loss harvesting.

Low Fees

3 factor fees are among the low­est in the indus­try. Thanks to the 3 factor and our stream­lined invest­ment oper­a­tions, we are able to offer the high­est qual­ity invest­ment man­age­ment ser­vices at a very low cost.

Better Returns Through Research

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(1) Analy­sis com­par­ing after tax per­for­mance of other advi­sors (or a self-managed, sophis­ti­cated investor) to 3 factor Indexing based on a glob­ally diver­si­fied port­fo­lio with a 60% equity, 40% fixed income allo­ca­tion. Ini­tial port­fo­lio val­ues assume the fol­low­ing: (a) $750 tax­able and $250k IRA with yearly addi­tions of $20k to tax­able account and $5k to IRA. (b)Taxes deducted via shares each April, assum­ing the high­est tax bracket for a Cal­i­for­nia investor. 

Past per­for­mance is not a pre­dic­tor of future performance.

3 factor has con­ducted exten­sive analy­sis con­cern­ing port­fo­lio per­for­mance. See “impor­tant dis­clo­sure” for details and dis­claimers regard­ing our state­ments con­cern­ing per­for­mance, and the var­i­ous assump­tions we have made in our analy­sis.