Ken Burke, Founder and Chief Investment Officer, Burke Wealth Management

In an interview with Invest:, Ken Burke, founder and chief investment officer of Burke Wealth Management, discussed the firm’s recently launched exchange-traded fund, its use of artificial intelligence, and its plans to partner with independent registered investment advisors. “There is a saying in Texas that you cannot microwave a brisket. Building a firm properly is a slow process,” Burke said.

How would you describe today’s investment environment and the opportunities in Houston?

The investment environment we focus on is global. We invest in high-quality global leaders in attractive industries with long-term growth characteristics greater than the broader market. It is a simple philosophy that has proven itself over time, and our goal is to deliver superior long-term returns for clients.

The broader equity market is never dull. There are sharp rotations, and a great deal is happening around the artificial intelligence revolution and how investors are positioning themselves. We maintain a long-term focus and make investments on a three- to five-year basis. Over the last 10 to 20 years, the market has become increasingly short-term. We believe that disconnect gives us an opportunity to identify high-quality businesses at attractive valuations.

Houston is a great market with considerable economic growth and development. That creates opportunities to find more clients and smaller companies with which we can partner as we grow.

What led Burke Wealth Management to launch an exchange-traded fund?

We have operated Burke Wealth Management for eight years. We began with a separately managed account strategy, bringing our investment approach to high-net-worth individuals.

Over the past year, we explored launching an exchange-traded fund, or ETF, to expand our ability to partner with local registered investment advisors, or RIAs. It is the same strategy we have managed for the past eight years, but in a different structure. Independent advisors typically invest through ETFs, so we wanted to make our offering available to them.

We also developed artificial intelligence tools for portfolio construction, rebalancing, client suitability, risk analysis, and performance reporting. We plan to bring those tools to RIA partners alongside the ETF. Our goal is to provide institutional-quality output in an automated format for common tasks facing independent advisors.

What challenge are you seeking to solve for independent advisors?

RIAs are often forced to make a difficult choice. They value their independence and client relationships, but when they go out on their own, they may have to choose between off-the-shelf investment models that commoditize customized advice or making a major investment of time and money to build a research department capable of delivering a bespoke result.

For large RIAs and investment banks, that investment is easier because they can spread the cost across billions of dollars in assets under management. For smaller RIAs, the resources required to build that capability often come at the expense of growing the business.

We are trying to offer a third way. We want to give RIA partners institutional-quality, customized portfolio management capabilities in an automated, accessible format centered on our actively managed core strategy. This allows us to grow alongside independent advisors and can remove one of the major restraints on their growth.

What concerns are clients raising in today’s market?

There is always unease around equity investing. Today, we are experiencing an incredible technological transformation. There is excitement about what artificial intelligence can deliver, but also trepidation about what it means for jobs, whether capital will be invested wisely, and whether bubbles could form.

We do not believe that is necessarily the case, but these are concerns we hear from clients. There is also considerable volatility, and sharp rotations within the markets amplify those concerns.

We have been doing this for eight years, and I believe we have compounded approximately 14% since we started. If someone had told me that eight years ago, I would have assumed we experienced a calm period of prolonged economic expansion.

Instead, we have faced a pandemic, the biggest inflation scare in 45 or 50 years, a global trade war, conflict in the Middle East, and the largest technological revolution of our lifetime.

The challenge is managing day-to-day fears and keeping people focused on the fact that we are not simply owning tickers running across a screen. We are investing in businesses with people, products, and leading market positions.

How has artificial intelligence changed your research process?

Artificial intelligence has revitalized our research process. We do not believe it will replace investment professionals, but it allows us to operate at the highest level of our expertise.

I compare it to a physician. The highest-value part of a physician’s job is treating the patient, identifying the illness, and developing a therapy. The less valuable parts involve insurance, scheduling, and documentation. The same principle applies to us.

We are a fundamental, deep-research, bottom-up investment firm. There is no getting around the time and effort required to vet a new idea or maintain research on an existing portfolio. Artificial intelligence allows us to automate much of the information gathering and summarization involved in that process.

We engaged a small artificial intelligence consulting firm in Houston to help us build tools that summarize company information in the way I prefer to receive it. Work that once required two or three weeks of reading reports, filings, and presentations can now be consolidated into approximately 20 minutes. That becomes the starting point for our research.

We still determine what is important and what fits our investment philosophy. Artificial intelligence does not make the decision, but it significantly reduces the time required to begin the analysis.

We have also built tools that help ensure we do not deviate from our strategy. Volatility can be disconcerting, and part of being a long-term investor is filtering out noise and resisting the impulse to trade aggressively when the underlying facts have not changed.

We’re really excited about the tools that we built that we’re going to deliver to our RIA partners. We envision becoming a comprehensive partner to local RIAs. We are an independent boutique asset management firm, and they are independent investment advisors. We believe independent firms need to support one another.

How does the firm differentiate itself in a consolidating industry?

Our differentiating factor has been persistence. There are not many boutique asset management firms that spend eight years bootstrapping a business.

I do not know whether it is stubborn persistence or relentless optimism, but we have continued moving forward. There is a saying in Texas that you cannot microwave a brisket. Building a firm properly is a slow process.

We set out to build the business the right way, beginning with compliance and operations. We created something we could scale while ensuring every client received an enormous amount of care. We also had to build an investment track record over time.

The ETF is an extension of what we have already been doing. It is another way for clients to access our investment strategy. We now offer separately-managed accounts and the ETF, and we are excited to bring both to the market.

What are your top priorities for the next three to five years?

Our top priority is bringing the ETF and supporting tools to the local RIA community. We will continue seeking high-net-worth individuals who may prefer separately managed accounts, but our primary growth priority is introducing this new offering.

We are not looking to work with 100 RIAs. We are probably looking for the right 10 or 12 partners over the next two or three years. We want to support one another’s businesses and grow collectively.

From a broader equity market standpoint, I am optimistic. The artificial intelligence revolution can feel disorienting and destabilizing, but I believe it will create a tremendous productivity boom for the United States and the global economy.

We will look for businesses that can use that productivity to drive higher profit margins and expand into new markets. We believe we can identify the companies best positioned to benefit.

Our approach will remain consistent. We will continue finding great businesses with leadership positions and then have the wisdom and patience to get out of our own way and allow them to compound and grow.