Expert knowledge combining financial science with real world applications.

The Beginning

October 1, 2015

Versatile Capital Management officially became a Registered Investment Advisor in January 2015. It is a very humble beginning. The goal of the firm is to “rise above the noise” of Wall Street. The noise is seductive, full of promises, but often short on the delivery. At its core, Versatile Capital Management, (VCM) is based primarily on well-established academic investment principals. One of the few truths in investment research is that nothing works all the time. However there are investment concepts that have been extensively researched which, if followed with discipline, have proven in the past to increase the odds of success. It is about reducing the personal biases and behavioral tendencies of fear and greed that plague many investors.

At the beginning the firm consists of John Russell, a former accountant, bond salesman, and investment rep, who over time realized that the “noise” only serves as a way to distract. Many of the lessons learned along the way were expensive. The other partner is Professor Bill McDonald, who is a finance professor at the University of Notre Dame’s Mendoza College of Business (the #1 undergraduate business school BY Bloomberg/BusinessWeek for the last five years). A self-proclaimed empiricist, Professor McDonald has written over 40 research papers in leading journals of finance, accounting, management science and economics. Most recently his work on textual analysis, along with Professor Tim Loughran, has been referred to in the Wall Street Journal, the London Times and Barron’s. Professor McDonald’s models serve as the foundation of the investment portfolios.

In the beginning the firm is offering two complimentary strategies. A tactical strategy, Systematic Global Alpha, and a passively run strategy, Strategic Core Global Asset Allocation1. The tactical strategy structures its portfolio from a relatively uncorrelated basket of low cost, liquid ETFs2 representing global asset classes. It is based upon the well-researched concept of momentum, with a modest adjustment to effect the volatility of the asset classes. The portfolio is rebalanced3 monthly using the quantitative models established by VCM. The strategy offers “Aggressive” and “Moderate” options. Our second offering, the Strategic Core Global Asset Allocation Portfolio is based on the tenants of the Efficient Market Hypothesis with a tilt toward the factors which have proven to add higher expected returns in the past. Each portfolio is customized to the clients risk tolerance. The two offerings provide our clients with the ability to balance their assets between an advantaged core portfolio and a more active alpha4-seeking portfolio.

As mentioned, humble beginnings but big aspirations. Hopefully by rising above the noise of Wall Street Versatile Capital Management is in a position to help each client obtain their unique financial goals. As Yogi Berra said “It’s tough to make predictions, especially about the future”. VCM is not in the prediction business. It is in the business of using widely acknowledged academic research to help navigate what is an unpredictable future.

  1. Asset allocation does not guarantee a profit or protect against a loss in a declining market. It is a method used to manage investment risk.
  2. Exchange-traded funds are sold by prospectus. Please consider the investment objectives, risks, charges and expenses carefully before investing. The prospectus which contains this and other information about the investment company, can be obtained from the Fund Company or your financial professional. Be sure to read the prospectus carefully before deciding to invest.
  3. Rebalancing can entail transaction costs and tax consequences that should be considered when determining rebalancing strategy. 4. Alpha is a measure of performance on a risk-adjusted basis. Alpha takes the volatility (price risk) of a stock or portfolio and compares its risk-adjusted performance to a benchmark index. The excess return of the position(s) relative to the return of the benchmark index is its alpha.

Investment Advisory services are offered through Versatile Capital Management, LLC, a Registered Investment Advisor.
This newsletter contains general information that may not be suitable for everyone. The information contained herein should not be construed as personalized investment advice. Past performance is no guarantee of future results. There is no guarantee that the views and opinions expressed in this newsletter will come to pass. Investing in the stock market involves gains and losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security.

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140 South Dearborn
Suite 1000
Chicago, IL 60603

Contact Details

  • John Russell
  • (312) 981-9848
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