🏆The Howard Marks Portfolio: Value Investing Meets ETFs

Welcome back to our Legendary Portfolio Series! This weekend, we're exploring the investment philosophy of Howard Marks, co-founder of Oaktree Capital Management and a respected voice in the investment community. Known for his insightful memos and understanding of credit markets, Marks spots value in overlooked areas. We'll summarise his principles and create an ETF portfolio that reflects his strategies.

Howard Marks isn't your typical Wall Street investor. With over five decades of experience, he's known for his patient, contrarian approach and his ability to find opportunities where others see risk. His memos, often dubbed “Wall Street bedtime stories,” blend sharp insights with humility. At Oaktree Capital Management, he built a $202 billion empire by specialising in alternative investments.

Switch to Solar and Save with EnergySage

Are you ready to take control of your energy bills and make a lasting impact on the environment? With EnergySage, switching to clean, affordable solar energy has never been easier. Whether you’re looking to save money, reduce your carbon footprint, or increase your home’s energy independence, EnergySage is here to guide you every step of the way.

EnergySage offers a simple and trusted marketplace where you can compare multiple solar installation quotes from top-rated local installers. Our free, unbiased Energy Advisors are available to help you understand your options and choose the best solution for your home and budget. You’ll have access to transparent information, ensuring you make informed decisions with confidence.

EnergySage users save ~20% on their solar installations compared to going it alone. Plus, our service is 100% free, with no hidden fees. Whether you're going solar to save on electricity, avoid utility rate hikes, or do your part for the planet, EnergySage is the most trusted way to start.

See how easy it is to go solar with EnergySage!

Get solar quotes

Key Principles of Marks's Investment Philosophy📃

Let's break down his investing DNA:

• 2️⃣Second-Level Thinking: Marks emphasises looking beyond the obvious first-level analysis that everyone else is doing. He believes true investment opportunities come from thinking differently and more deeply than the crowd.

• 🔁Market Cycles Understanding: Marks is famous for his deep appreciation of market cycles and how they create opportunities. He believes understanding where we are in a cycle is crucial for making informed investment decisions.

• 🔒Risk Management Focus: Marks prioritises understanding and managing risk rather than chasing returns. He believes superior investment results come from avoiding big mistakes rather than making spectacular gains.

• 🅰️Contrarian Approach: He's known for being greedy when others are fearful, particularly in distressed debt markets where fear often creates mispricing.

• 📈Value Over Growth: Marks consistently emphasises buying assets below their intrinsic value, whether in bonds or stocks.

The Howard Marks-Inspired ETF Portfolio🌲

Below, we've curated ETFs that align with Howard Marks's investment philosophy. Here's how we can translate his principles into a modern ETF portfolio:

1. VanEck Fallen Angel High Yield Bond ETF (ANGL)

ANGL captures Marks's love for finding value in fallen angels - bonds that were once investment grade but have been downgraded to high yield, often creating pricing inefficiencies that value investors can exploit.

2. First Trust Senior Loan Fund (FTSL)

FTSL represents Marks's expertise in senior loans, offering potential income with some protection against rising rates and default risk.

3. Vanguard Small-Cap Value ETF (VBR)

This ETF captures Marks's value investing philosophy in the small-cap space, where inefficiencies often create opportunities for patient investors.

4. VanEck J.P. Morgan EM Local Currency Bond ETF (EMLC)

EMLC reflects Marks's willingness to look globally for value, particularly in emerging markets where risk perceptions can create mispricing.

5. iShares Preferred and Income Securities ETF (PFF)

PFF aligns with his interest in securities offering income and potential capital appreciation, which mainstream investors often overlook.

🌟Build a Value-Focused Portfolio

Howard Marks's investment philosophy emphasises that successful investing is not about chasing the latest trends. Instead, it focuses on thinking differently, understanding market cycles, and maintaining discipline during periods of volatility. The ETF portfolio we discussed today provides a modern way to apply these timeless principles.

Building a successful portfolio involves more than selecting the right ETFs; it requires the right mindset and approach. Join us at ETF UNO, where we regularly share insights, analysis, and portfolio strategies to help you become a better ETF investor. Together, we can create more resilient and successful investment portfolios.

DISCLAIMER: This article is for informational purposes only and does not constitute investment advice. Always conduct your own research and consider consulting with a financial advisor before making investment decisions.