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Michael Willis has spent the better part of the last three decades making money on the stock market as an equities trader with big name Wall Street firms and with his own company.
Now the 53-year-old portfolio manager is bringing his operations, known as Index Funds and the Index Group Inc., to Honolulu from Colorado. The short-term goal is to build up his office here and incrementally grow his equity fund, an S&P 500 index mutual fund which trades under the unusually descriptive ticker symbol INDEX.
The longer-term idea is to build the fund, which now has $44 million in assets, into something big. Willis won’t reveal his plan – yet.
Heading into the fund’s fifth anniversary in April 2020, Willis is raising $4 million to expand in Hawaii and market the fund “to get the entire Internet to look at us.”
His goal, he says, is to be known in Hawaii, located as far away from Wall Street as he can be — and also be known as “America’s index fund.”
Michael Willis, founder and lead portfolio manager of Index Funds and the Index Group Inc., has moved his firm and mutual fund to Honolulu.
Stewart Yerton/Civil Beat
He’s looking to hire not just a senior compliance officer and a junior portfolio manager, but also a videographer and a digital media specialist, hints of his marketing aspirations. And he wants everyone located in Hawaii, instead of working remotely, a way to create positive energy that can grow something big.
”When you pour positive energy into a room you can solve any problem,” he said.
The impression that Willis is thinking of something really big – maybe even disruptive – comes into view during an interview, which he conducts over an acai bowl sitting upstairs on the second-floor balcony of Whole Foods Market overlooking Kamakee Street.
Willis often uses the word “bypass” to describe tools that have let individual investors work around the staid investment banks and big-time brokerages that once were Wall Street’s gatekeepers.
Willis isn’t just talking about discount brokerages like Charles Schwab and E*Trade. He also points to Robin Hood, the latest iteration of the discount broker, which offers app-based, unlimited free trading of not just stocks, but more exotic securities like options that let investors take short positions in companies they think are going to tank.
“That’s a $7 billion company now,” he says “And they’ve got 3 million app users and mainly millennials. Eighty percent of their market is millennials.”
And he points to the way people, especially millennials, are increasingly bypassing even banks, which were once the cornerstone of the financial services industry. Hand-held screens are taking the place of big buildings with marble columns, he says.
It’s the crux of his presentation: “Everything’s going to this,” he says, holding up his phone. “I’m not quite there yet to where I can do everything on my phone. But my kids can.”
Willis won’t say exactly what he’s planning, but he says, “We’ve got what we think is a billion-dollar bypass.”
Capitalizing On Valuable ‘Digital Real Estate’
What Willis will talk about is his firm, The Index Group, and its fund, which goes by the name “Index Funds S&P 500 Equal Weight.”
Like other index funds, the stocks in Willis’ mutual fund mirrors those in the S&P 500, a list of 500 large companies. It’s called “equal weight” because the fund holds equal amounts of the 500 stocks. Other index funds weight their holdings to own more of the companies with the most market value.
Willis said the equal weighted fund is the best scheme. It’s also, he says, the best way to make the most of what he describes as an extraordinarily valuable ticker symbol. Investors are increasingly shifting money into index funds, Willis said. So having a fund called “INDEX” is “a big deal.”
“We’ve secured digital real estate that we think is really valuable because we think the next Wall Street’s going to be dominated by index funds,” he said.
And he says he believes his fund is tracking the best performing index.
“I could have picked any index in the world to track,” he said. “There’s a reason I picked the S&P 500 Equal Weight.”
Hawaii: An Easy Choice
As the only index fund based in Hawaii and, from what he can tell the only mutual fund, Willis is something of a pioneer. For Willis, the decision to move to Hawaii was more personal than professional. He grew up on Guam from 1975 to 1982 and wanted his kids — he has four daughters — to experience the island lifestyle he loved.
Hawaii, he says, was an easy choice.
Willis said he hasn’t interacted enough with other local businesses to say how Hawaii’s business culture compares to those of other locales. But he has been struck by how much the big three industries — tourism, real estate and the military — dominate the local economy. As a graduate of California Polytechnic University who covered the tech sector for firms like Smith Barney, he’s also surprised by how few technology sector jobs there are.
“That definitely sticks out to me,” he said.
“Hawaii’s Changing Economy” series is supported by a grant from the Hawaii Community Foundation as part of its CHANGE Framework project.
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