About Heartland Trust Company and Dustin Sobolik
Steve Halverson founded Heartland Trust Company in 1990 as an independent trust company, the first of its kind in North Dakota. The company’s focus is to provide traditional trust and investment services to clients in the tri-state area without interference from a “corporate” parent company.
Dustin Sobolik joined Heartland Trust Company (“Heartland”) in 2015 and now serves as the Director of Investments. He oversees manager selection and portfolio construction. When he’s not at work, he spends time traveling and working in his garden.
Heartland’s largest challenge was finding a differentiated way to analyze risk in detail. To elaborate, Sobolik explains “it is difficult to access robust software for scenario and stress testing, especially during tail risk events. The conventional sources to measure risk and scenario test for retail wealth managers like ourselves are either deficient or wholly cost prohibitive. Other industry offerings have limited capabilities and challenging interfaces.”
Heartland has partnered with Venn by Two Sigma to help with several key workflows:
- Data Visualization and Screening
- Scenario and Stress Testing
- Manager Selection and Private Funds
Venn provides a much more nuanced view on risk that goes beyond traditional modern portfolio theory statistics. A thorough review of the factor lens helped me develop an intuitive understanding of risk premia and how we could incorporate it into our portfolio models.
Data Visualization and Screening
Venn has revolutionized our portfolio construction. I don’t think anyone should underestimate excellent data visualization. We used to rely on a lot of free services for factor regressions, but they weren’t terribly conducive to studying factors in detail, much less screening for them.
By using Venn’s Factor Lens and Data Library, we are able to easily identify and use negatively correlated risk premia to offset one another. The classic pair trade is value and momentum, but Venn has enabled us to identify a number of other structural trades spanning multiple asset classes that should enable us to drive persistent excess return going forward. It’s also enabled us to source some of those factors from unconventional sources.
Scenario and Stress Testing
At the very least, our existing processes needed to be supplemented by robust scenario and stress testing. Venn allows us to do this and more.
Manager Selection and Private Funds
Certain prominent fund managers have asserted that private valuations can amount to ‘volatility laundering’ and despite the hyperbole, I’m inclined to agree with them. Private products are becoming more prevalent on the advisory side and we needed a software that could analyze them effectively. The ability to desmooth and interpolate returns gives us a much more accurate picture of the risks our clients are taking.
Further, in public funds, we’re able to analyze a fund manager’s true ‘alpha’ after controlling for other factors.
Results and What’s Next
Overall, Heartland has leveraged Venn to implement key workflow improvements. Looking ahead, Sobolik will continue to focus on ways to outperform their benchmarks.
From an investment standpoint, we’re always looking for structural ways we can outperform our benchmarks. However, if we zoom out and look at our business as a whole, we just want to find new ways to better serve and delight our clients.
Disclaimer: The Venn subscriber featured in this article was not compensated for their statements. As a Venn subscriber, their use of portfolio analytics or other Venn features and their experience could differ from your organization’s due to their particular use of Venn, the version of Venn used, or other factors. Not all subscribers will be equally satisfied. The person providing this testimonial was selected based on a variety of factors, some of which are subjective. This document is for informational purposes only. Not an offer to buy or sell securities. Click here for Important Disclosure and Disclaimer Informatio
The information contained in this article is provided for general informational and educational purposes only, and should not be construed as investment advice. The contributor to this material is associated with a client of Two Sigma Investor Solutions, LP (“TSIS”). Neither TSIS nor its affiliates have compensated the contributor for his statements. The statements from the interview have been edited and reformatted by TSIS with the contributor’s approval. Unless otherwise noted, the contributor’s statements do not represent the actual views or opinions of TSIS or its affiliates, or any officers, directors, or employees thereof.
This article is not an endorsement by Two Sigma Investor Solutions, LP or any of its affiliates (collectively, “Two Sigma”) of the topics discussed. The views expressed above reflect those of the authors and are not necessarily the views of Two Sigma. This article (i) is only for informational and educational purposes, (ii) is not intended to provide, and should not be relied upon, for investment, accounting, legal or tax advice, and (iii) is not a recommendation as to any portfolio, allocation, strategy or investment. This article is not an offer to sell or the solicitation of an offer to buy any securities or other instruments. This article is current as of the date of issuance (or any earlier date as referenced herein) and is subject to change without notice. The analytics or other services available on Venn change frequently and the content of this article should be expected to become outdated and less accurate over time. Any statements regarding planned or future development efforts for our existing or new products or services are not intended to be a promise or guarantee of future availability of products, services, or features. Such statements merely reflect our current plans. They are not intended to indicate when or how particular features will be offered or at what price. These planned or future development efforts may change without notice. Two Sigma has no obligation to update the article nor does Two Sigma make any express or implied warranties or representations as to its completeness or accuracy. This material uses some trademarks owned by entities other than Two Sigma purely for identification and comment as fair nominative use. That use does not imply any association with or endorsement of the other company by Two Sigma, or vice versa. See the end of the document for other important disclaimers and disclosures. Click here for other important disclaimers and disclosures.
This article may include discussion of investing in virtual currencies. You should be aware that virtual currencies can have unique characteristics from other securities, securities transactions and financial transactions. Virtual currencies prices may be volatile, they may be difficult to price and their liquidity may be dispersed. Virtual currencies may be subject to certain cybersecurity and technology risks. Various intermediaries in the virtual currency markets may be unregulated, and the general regulatory landscape for virtual currencies is uncertain. The identity of virtual currency market participants may be opaque, which may increase the risk of market manipulation and fraud. Fees involved in trading virtual currencies may vary.