Description of Firm
Innovative Portfolios LLC (“IP” or “Advisor”) is a registered investment adviser based in Indianapolis,
IN. We are organized as a limited liability company (“LLC”) under the laws of the State of Indiana. We
have been providing investment advisory services since 2015. We are owned by Sheaff Brock Capital
Management, LLC (“SBCM”), a holding company owned by David Gilreath and Ronald Brock.
This Brochure provides important information about Advisor, its services and compensation, the costs
of its advisory services, and situations where its interests may conflict with the interests of its clients.
Clients should pay particular attention to the discussions about the various potential conflicts of interest
because these can affect Advisor’s judgment in managing client’s account, in recommending the
custodian to hold account assets, and in choosing the broker to execute trades for the account, among
other important considerations. Advisor acts as subadvisor to Sheaff Brock Investment Advisors, LLC
(“SB”), a registered investment advisor which is wholly owned by our parent, SBCM. Advisor will have
the authority to invest in shares of the Auer Growth Fund whose investment adviser, SBAuer Funds,
LLC (“SBAF”), is partially owned by SBCM. SBCM will benefit economically from advisory fees earned
by SB and SBAF. This benefit provides an incentive to invest a client’s account in the SBF based on
the economic benefit our parent will receive rather than the investment needs of the client.
The following paragraphs describe our services and fees. Refer to the description of each investment
advisory service listed below for information on how we tailor our advisory services to your individual
needs. As used in this brochure, the words “we,” “our,” and “us” refer to Innovative Portfolios LLC and
the words “you,” “your,” and “client” refer to you as either a client or prospective client of our firm.
SERVICES ADVISOR OFFERS
• ETF Fund Advisory Services
• Model Portfolio Management Services (“MPM Services”)
• Model Marketplace Services
• Private Fund Investment Management Services
ETF FUND ADVISORY SERVICES
We provide investment advisory services to the Preferred-Plus ETF and Dividend Performers ETF,
exchange traded funds of the Listed Funds Trust, an investment company registered under the
Investment Company Act of 1940. IP is an investment manager only to the funds and does not run the
operations of either fund.
Preferred-Plus ETF (“IPPP”)
IPPP investment objective is income. IPPP will use a variety of preferred securities, closed end mutual
funds and exchange traded funds (“ETFs”) in the core portfolio, while employing an option overlay.
The option overlay seeks positive cash flow from creating a position of a credit spread on the S&P 500.
A credit spread is an options strategy that involves the purchase of one option and a sale of
another option in the same class and expiration but different strike prices. Such a strategy results in a
net credit for entering the option position and wants the spreads to narrow or expire for profit.
Dividend Performers ETF (“IPDP”)
IPDP investment objective is total return (high current income and capital appreciation). IPDP is a
portfolio of high quality, dividend-paying equities in the core portfolio, while employing an option
overlay. The option overlay seeks positive cash flow from creating a position of a credit spread on the
S&P 500.
Interested investors should refer to the funds’ Prospectus and Statement of Additional Information
("SAI") for important information regarding objectives, investments, time-horizon, risks, fees, and
additional disclosures. These documents are available by calling 800-617-0004 or on-line at
www.innovativeportfolios.com. Prior to making any investment in the funds, investors and prospective
investors should carefully review these documents for a comprehensive understanding of the terms
and conditions applicable for investment in the funds.
MODEL PORTFOLIO MANAGEMENT SERVICES ("MPM")
We provide discretionary MPM services to separately managed accounts (“SMAs”) for registered
investment advisors and institutional investors. Each Model Portfolio is designed to meet a particular
investment objective. Model Portfolios can be used to build an appropriate mix of income and growth
potential for the client. Following are the current Model Portfolios we offer:
Model Portfolio Management Strategies
Each Model Portfolio is designed to meet a particular investment objective. Following are the current
Model Portfolios we offer:
IntelliBuilD Growth - This model consists of about 33 domestic equity positions which are market cap
agnostic. The portfolio is normally 100% invested in equities. The stock selection process uses the
Investor's Business Daily IBD 50 and William O’Neil stock lists. The strategy follows a quantitative
methodology while utilizing institutional level research. Turnover is reasonably high at about one or two
position changes per month. The primary objective of the strategy is capital appreciation.
Outlier Growth - This model consists of about 33 domestic equity positions which are market
capitalization agnostic. The portfolio is normally 100% invested in equities. The stock selection process
uses a combination of three sources to create quantitative buy and sell decisions:
1. MAP Signals – An institutional research firm that seeks to identify equities with unusually large
institutional buy-side volume, and those showing repeated instances of large volume over a
period of six months.
2. Revelation Investment Research – An institutional research firm that focuses on “downside risk”
attributes and scores stocks on their potential downside vs. the S&P 500.
3. William O’Neil & Co. – The publisher of Investor’s Business Daily and quantitative research firm
with much of their work focused on technical momentum.
Positions are scored, reviewed, and potentially changed monthly. Turnover can be reasonably high
with several changing monthly. The primary objective is capital appreciation.
Dividend Growth & Income - This model consists of about 33 generally domestic equity positions. The
portfolio objective is to select stocks that strive to provide high, steady and consistent dividend income
as well as seeking stocks that have the ability to increase dividends and provide long term capital
appreciation over time. Turnover is low at about two position changes per quarter, less than 45%. The
investment objective of the portfolio is income and capital appreciation.
Bulls of the Dow - This model consists of the ten highest scoring stocks in the Dow Jones Industrials
Index. The strategy seeks to invest in stocks that offer the best opportunity to avoid downside risk and
have the opportunity to offer long term capital appreciation. The selections are rebalanced quarterly
which generally results in two to three changes per quarter. Portfolio objective is capital appreciation
and dividend income.
Real Estate Income & Growth – The model is a fully invested portfolio of publicly traded Real Estate
Investment Trusts (REIT), companies servicing or developing real estate, or funds focused on
investments in real estate. The strategy is mostly comprised of generally smaller and midsized
capitalization REITs in the 13 REIT sectors of the equity REIT universe. The REITs are selected
based on the investment process of managing downside risk while focused on capturing current
income and the opportunity for capital appreciation. The strategy objective is income and the
opportunity
for capital appreciation.
Preferred Income - This portfolio invests in approximately 25-30 preferred stocks. The portfolio seeks
quality preferred securities (both $25-par retail preferreds and $25-par bonds) and $1,000-par
institutional preferred capital securities with sufficient liquidity. The portfolio can consist of several
differed types of preferreds, including cumulative preferred, callable preferred, adjustable-rate
preferred, fixed-to-float preferred and trust preferred. The primary objective is to seek income. Capital
appreciation is generally minimal.
Covered Call - This model consists of 25 to 30 generally domestic equities chosen by similar methods
described in the above portfolios. Each position is then covered by a "covered call" option position.
First, the strategy seeks to earn premium credit from call options that can provide current and
consistent income. Second, the strategy seeks to invest in high quality equities that can offer the
potential for capital appreciation. Turnover is very high and short-term capital gains are common. The
portfolio objective is income and secondarily capital appreciation.
Option Overlay Index Income - The objective of the overlay portfolio is cash flow and eventual capital
gain from the premiums of put option credit spreads on a recognized equity ETF/index (usually the
S&P 500). A short put spread is initially sold on an equity ETF/index; consisting of a short put option
and long put option executed simultaneously. The strategy pairs a short option approximately 3% or
more out-of-the money with a long "insurance"-type put usually with a strike price 15% lower. If the
spread expires out-of-the-money, a gain is created, and a new spread is written. However, if the
spread is in-the-money at or near expiration, the spread is rolled out in time for a credit, and a new
"insurance" put is bought. Turnover of the spreads is normally monthly. Issues held are generally
marginable stocks, bonds, mutual funds, cash, and credit spread put option positions. Index Income
portfolios add additional equity risk to the underlying portfolio holdings.
The Option Overlay Index Income strategy can be managed as a standalone strategy using the client’s
collateral or managed as an overlay on any of the model strategies detailed above.
MODEL MARKETPLACE SERVICES
Advisor’s model portfolio management strategies are made available through various model
marketplace platforms. Advisor provides model marketplace platform with regular updates to the
investment holdings (i.e., “models”) contained in certain Advisor managed investment strategies.
Investment advisors then utilize one or more of Advisor’s investment models to invest client assets. In
these situations, the platform is ultimately responsible for implementing Advisor’s ongoing investment
recommendations and for performing many other services and functions typically handled by Advisor in
a discretionary managed account program. No other services are offered to Model Marketplace
accounts, and Advisor considers these assets to be non-discretionary assets under management.
Providing investment management services to both separately managed client accounts and to model
marketplace platforms can give rise to certain conflicts of interest. Advisor’s recommendations implicit
in the investment models provided to the platform typically reflect recommendations also being made
by Advisor to other separately managed accounts. As a result, Advisor may have already commenced
trading for its discretionary separately managed accounts before the program platform has received or
had the opportunity to evaluate and act upon Advisor’s investment model recommendations. This
could ultimately result in client trades placed by the platform being subject to price movements,
particularly with large orders or where the securities are thinly traded, which may result in model
program clients receiving prices that are less favorable than those prices obtained by Advisor for its
discretionary client accounts.
PRIVATE FUND INVESTMENT MANAGER SERVICES
IP is the investment advisor to a privately-offered pooled investment vehicle (“Private Fund”). The
Private Fund is not registered under the Securities Act of 1933 nor the Investment Company Act of
1940. Accordingly, interests in this fund is offered exclusively to investors satisfying the applicable
eligibility and suitability requirements in the private placement transaction. No offer to sell the Private
Fund is made by the descriptions in this Brochure, and as noted, the fund is available only to investors
that are properly qualified. IP provides discretionary investment management services to the Private
Fund. The investment management services is offered directly to the Private Fund and not to
investors in the Private Fund. Accordingly, such services are tailored to the Private Fund’s investment
objectives, strategies and guidelines set described in the Private Fund’s offering documents.
SUBADVISOR SERVICES TO AFFILIATED ADVISOR
IP acts as subadvisor to SB, a registered investment advisor which is a wholly owned by our parent,
SBCM. In these arrangements IP offers Model Portfolio Management strategies (“MPM”), as
described above, to sub-advised accounts. IP provides continuous and regular supervision of the
investment strategy. IP will execute all trades in sub-advised accounts. SB will be responsible for all
communications to their client accounts sub-advised by IP. SB will determine suitability for
investments in IP’s MPM strategies.
AFFILIATED MUTUAL FUND
As described above, Advisor is affiliated by virtue of parent ownership with a registered investment
adviser, SBAF, an SEC-registered investment adviser. SBAF offers the Auer Growth Fund. Advisor
has the ability to invest in the Auer Growth Fund however in those situations Advisor does not collect
an advisory fee. See discussion of the applicable fees and expenses, breakpoints, risks and liquidity
issues relating the Auer Growth Fund may be found in the prospectus for the fund at
www.sbauerfunds.com
SECURITIES ABOUT WHICH WE OFFER ADVICE
We offer advice regarding a wide variety of securities, including:
• cash and cash equivalent
• exchange-listed or over-the-counter, common, preferred, or convertible securities of domestic
or foreign issuers;
• warrants;
• certificates of deposit;
• corporate debt securities;
• municipal securities;
• securities issued by the US Treasury, agencies, or government sponsored enterprises;
• shares of money market funds, open-end investment companies (mutual funds), closed-end
funds, unit investment trusts, and exchange-traded funds (“ETFs”); and
• option contracts on securities.
Please refer to the discussion in Item 4 with respect to the MPM strategies and in Item 8 for
information about the investments we typically recommend.
Management of Account Until Advisor Receives Notice
Unless and until the client notifies Advisor to designate a different portfolio for the account or to notify
Advisor of material changes in the suitability information, Advisor will continue to manage the account
according to the investment objective in its records. Clients should inform Advisor promptly of
significant changes in the investment goals or objectives, investment time horizon, tolerance for risk, or
liquidity needs of their account so that appropriate changes can be made.
Assets Under Management
As of December 31, 2023, IP managed $763,867,114 on a discretionary basis and $3,482,109 on a
non-discretionary basis for total assets under management of $767,349,223.