Picking the right fund is like choosing shoes for a marathon. You wouldn’t pick flashy sneakers just because they look fast, right? You need shoes that can handle the long haul, provide comfort every step of the way, and won’t fall apart midway through. In investing, outperformance is exciting, but consistency? That’s what keeps you running smoothly. And high fees? They’re like running with weights strapped to your ankles—completely unnecessary. The goal is to find the perfect pair that gets you across the finish line in one piece, without the extra baggage.
Who’s Bradford Ferguson, and Why Should We Care?
First, let’s meet Bradford Ferguson of Halter Ferguson Financial. He’s not some distant Wall Street power player. Think of him as more of a “financial Sherlock” based in Indianapolis—focused, insightful, and a bit of a mystery solver. His idea is simple yet brilliant: build a system that helps find funds behaving like equities (with solid returns) but without causing sleepless nights when the market has a meltdown. His metrics? They’re a litmus test, picking the winners out of a sea of financial products your advisor might throw at you.
Now that we’re on the same page, let’s break down the four big Ferguson Metrics that do the heavy lifting.
1) The Outperformance Metric (FOM)
The Outperformance Metric (FOM) is like your fund’s “bragging rights.” It measures how much better—or worse—a fund performed compared to its peers over 3, 5, and 10 years, plus year-to-date. Imagine it as tracking how fast your car is speeding down the investment highway—except this highway is the stock market. If your fund boasts a solid number here, it’s like having a car that not only keeps up with traffic but zooms ahead, leaving other vehicles in the dust.
2) The Ferguson Consistency Index (FCI)
Consistency is key. That’s where the Ferguson Consistency Index (FCI) comes in. You want a fund that’s steady, like your best friend who always shows up on time—rain or shine. The FCI measures how consistently a fund beats its peers each year. If your fund hits a 1.00, it’s a win year after year. But a -1.00? That’s a losing streak no one wants. The best part? The FCI sets realistic expectations. It prepares you for a bumpy year without making you panic, as long as your fund gets back on track consistently. Patience, my friend, patience.
3) The Ferguson Hurdle Rate (FHR)
Think of the Ferguson Hurdle Rate (FHR) like the bar in a high-jump contest. It’s the line a fund must clear to count as a winner for the year. If a fund has the volatility of the S&P 500, this bar usually hovers around 1.00% per year. Higher risk? The bar climbs. Lower risk? The bar drops. This metric keeps you from freaking out when markets get wild, helping you gauge what’s normal turbulence versus panic-inducing chaos.
4) The Ferguson Mega Ratio (FMR)
Now, here’s where Bradford goes full “Moneyball.” If you’ve seen the movie, you remember Peter Brand explaining how baseball could be distilled into one number. Bradford applies the same thinking to investing with the Ferguson Mega Ratio (FMR). It’s a blend of consistency, risk, and expenses, all crunched into one powerful number. Think of it like a financial GPS that tells you, “After crunching everything, here’s how this fund really stacks up.”
When you're picking a fund, you want the smoothest ride possible. No one volunteers for a rickety wooden rollercoaster that jostles you left and right, yeah? You want the modern, high-tech version that glides seamlessly through the curves. Consistency keeps things smooth. But that’s not enough—you want outperformance, too, giving you those thrilling moments when your fund leaves its peers behind.
And what about volatility? A fund that’s too volatile is like that clunky rollercoaster—it might be exciting at first, but the stress it causes isn’t worth the price of admission. That’s why we penalize for volatility. And high fees? Paying extra for a ride that’s already uncomfortable? No thanks. The perfect formula combines outperformance and consistency, divided by volatility and expenses. That gives you the smoothest, fastest, and most cost-effective journey through the financial markets.
Bringing It All Together
Here’s the real magic of the Ferguson Metrics: they simplify complexity. Whether it’s the FOM telling you if your fund has turbocharged returns, the FCI giving you the thumbs up on reliability, or the FHR setting your expectations for volatility, these metrics give you clarity. And the FMR? It’s your all-in-one financial compass, pointing you toward smarter, smoother investments.
So next time you're evaluating funds, think of these metrics like advice from a seasoned mentor. They won’t just guide you through turbulent markets—they’ll help you thrive. And if Bradford Ferguson walks into a room? You’ll know he’s the guy who blended strategy with simplicity for real-world investors.
Bradford Ferguson Smarter Investing
Bradford Ferguson Smarter Investing