Presentation Transcript

1. Meet our newest actively managed bond strategy

2. Introduction: Flexible Plan Investments, Ltd. CLIENT COMMUNICATIONS: OnTarget Monitoring Quarterly Newsletter Weekly Hotline Daily Web Access * Approximate value as of September 30, 2011 Money manager for over 30 years One of the earliest practitioners of active investing Wall Street expertise with a Midwestern heart Headquarters in Bloomfield Hills, MI Over $1 billion assets under management* 50+ employees Service and compliance oriented Working with over 600 B/D’s & RIAs nationally
3. Who we are Research Ph.D led research department with over 75 combined years of professional experience in market analysis Client Services Call center Interactive website Compliance Over 100 years combined legal experience with three attorneys on staff Dedicated Compliance Officerand staff Service Twelve external Regional Sales Managers Eight person internal advisor support team
4. What do you think of stocks? Equities are below their 2000 & 2007 highs Daily volatility similar to great depression High frequency trading – is it fair? Earning estimates are always wrong What happens when the Fed runs out of bullets?
5. What Chairman Volker started, Bernanke will soon end Treasury bull market began in June of 1981 10 year rates are below 2% Interest rates can only go to 0% Treasuries are a very crowded trade! Interest rates trend for decades
6. How HY Bonds got their start Perfect balance sheets Growth companies not allowed Restrictive bank loans Private placements An industry was born!
7. HY Bonds are a contract IOU from a corporation to pay you back principle plus interest Bond holder has a right to collect against the company’s assets If bonds are a contract, what are equities?
8. The HY Bond Market is over $1.1 trillion and growing 13% a year Source: Journal of Applied Corporate Finance, Volume 21 Number 3 (Summer 2009) pgs. 65-79
9. HY Bonds fall into two categories Rising Stars – Fast-growing companies that are on their way to being investment grade Fallen Angels – Once investment grade, but credit rating got reduced due to declining financial condition
10. What kinds of companies are considered high yield?
11. The market pays HY Bond investors additional compensation Source: Journal of Applied Corporate Finance, Volume 21 Number 3 (Summer 2009) pgs. 65-79
12. Are you aware that HY Bonds outperformed the total stock market in the 1990’s by 37.5%?
13. HY Bonds do well in two kinds of markets The economy is growing The economy declines The economy is flat or stagnant
14. The performance of HY Bonds in the lost decade Source: PerTrac Analytics
15. HY Bonds have averaged mid-teen annual returns during up markets, but have only experienced a fraction of the losses found in equities during down market years.
16. Return versus risk – better than Small Caps Not Junk! Small Caps Avg. Annual Return 1991-2011 Negative Year Average Volatility High Yield Bonds Data from Flexible Plan Hypothetical research reports. See disclosures therein and at conclusion. Source: PerTrac Analytics
17. Is there a better way?
18. A strategically timed HY Bond portfolio could mean you don’t have to deal with frustrated clients.
19. HY Bonds must be actively managed HY Bonds can drop like a safe 2008 was not pretty - average loss was -25% Early warning indicator for the economy Plenty of time to step aside Capital must be protected!
20. Why we prefer mutual funds Diversified – 60 to 100 different bonds Mitigation of company specific risk Skilled Manager focused on company financials Large portfolio of bonds reduces volatility Allow us to be flexible
21. Our sell discipline seeks to position your client’s Strategic High Yield portfolio so that 95% of their funds will not be exposed to market risk.
22. Active Management + High Yield Bonds SHYB* - Strategic High Yield Bonds Avg. Annual Return Dec 2001- June 2011 Negative Year Average Volatility Source: PerTrac Analytics; *Data from Flexible Plan Hypothetical research reports. See disclosures therein and at conclusion.
23. Protecting your capital is job one! 100% to money market if HY Bonds drop by 3.5% By selling high we get to buy back at a lower price
24. Strategic High Yield Bond - Reward versus Risk NDX - $10 of Reward for every dollar Invested Nasdaq High Yield Russell 2000 SP 500 SHYB* Equity Avg. Annual Return Dec 2001- June 2011 Treasuries Corporate Fixed Income International CDs Negative Year Average Volatility Source: PerTrac Analytics; *Data from Flexible Plan Hypothetical research reports. See disclosures therein and at conclusion.
25. The blend of active money management & HY Bonds can be the perfect marriage for client accounts.
26. Strategic High Yield Bond buy and sell signal dates
27. Summary HY Bonds are not junk! Equity-like returns with much lower risk Risks in treasury bonds is increasing HY Bonds are a contract Our sell discipline seeks to protect 95% of the client’s funds from market risk HY Bonds + active management = satisfied client
28. Why another high yield bond strategy? One of the most effective active management strategies Trades more often then most competitors Other providers are at capacity – many of the best high yield funds are not available to them – we’re still small & flexible Diversify your clients’ managed high yield investments by adding a manager
29. Why active management? Strategies are actively risk managed Allocation shifts to seek protection against unnecessary risk Strategies draw upon a larger pool of investment options to take advantage of opportunities Those nearing retirement can benefit from the upside potential of exposure to stocks while having an active, risk-managed portfolio
30. Why strategic diversification? The magic of diversification – below-average risk Many top performing strategies have larger draw downs; diversifying allows their inclusion in non-aggressive portfolios Markets change and what works changes Every strategy works until it doesn’t A possible solution to Black Swans
31. Three Routes to a Strategic Diversification Solution Based on Investable Assets * The available Evolution Funds are: All-Cap Equity, Alternative Investments, Market Leaders and Managed Bond available through Direxion Funds @ direxionfunds.com These materials have been independently produced by Flexible Plan Investments, Ltd. Flexible Plan Investments is independent of, and has no affiliation with, Charles Schwab & Co., Inc. or any of its affiliates. Schwab is a registered broker-dealer and member SIPC. Schwab has not created, supplied, licensed, endorsed, or otherwise sanctioned these materials nor has Schwab independently verified any of the information in them. Flexible Plan Investments provides you with investment advice, while Schwab maintains custody of your assets in a brokerage account and will effect transactions for your account on our instruction. Account Size $5,000 and higher Dynamic Fund Profiles - Includes: Patent pending software from Morningstar/Ibbotson; 5 suitability- based portfolios exclusively uses the Evolution Managed Funds for maximum fee reduction; and invests in ETF’s, stock baskets and funds. With 75 bps fund credit that lowers the client fee to just 1.25% and you still make 1.0% (Small Accounts are capped at a 2% annual fee before credits $25,000 and higher a. Optimizer - Create Your Own Portfolio of Strategies. The Flexible Plan Illustration Generator allows you to optimize the portfolio of 5 to 8 actively managed strategies. b. Multi-Strategy Portfolios Custodied at Charles Schwab & Co., Inc. (“Schwab”) – Blended portfolios utilizing 5-10 strategies chosen from a universe of dozens of actively managed strategies; five suitability profiles; traded daily* $100,000 and higher Strategic Allocation Service (SAS)- designed for our Premier Accounts -Flexible Plan selects the strategies suitable for the risk profile and investment time horizon, monitors their performance, and reselects and reallocates as necessary to meet the OnTarget goals
32. SAS selects from over 70 actively managed proprietary strategies Each portfolio holds up to 10 actively managed strategies Portfolios are fully discretionary, quantitative, non-subjective and ACTIVE Designed to deliver “DEFENSE” in falling markets and “OFFENSE” in rising markets Independent Custodian is Trust Company of America (TCA)
33. How are the strategies that make up a SAS profile chosen each quarter? Source: Flexible Plan HYPOTHETICAL Research Report. Returns shown are after 2% management fee. An establishment fee of 1.2% has been deducted at inception. A SAS portfolio is drawn from scores of active strategies to create what FPI believes is the best combination for your client’s risk profile.
34. SAS profiles utilize a blend of strategies Current* profile portfolios are using: Market Leaders Strategic - 100% EMF Next Generation Asset Allocation Select Alternatives Select Alternatives - 100% EMF Self-Adjusting Trend Following Systematic Long/Short Bond Trading *Third Quarter, 2011 Global Maturities Lifetime Evolution Lifetime Evolution - 100% EMF Managed Income Managed Income Aggressive Market Leaders Strategic
35. Multi-Strategy Portfolios utilize a blend of strategies Current* profile portfolios are using: Strategic High-Yield Bond Self-Adjusting Trend Following Bear Necessities Managed Income Aggressive Best Tech Third Day Tactical Blend Balanced Market Leaders Strategic / 100% EMF with Alternative Volatility-Adjusted NASDAQ Systematic Long/Short Bond Trading Market Leaders Strategic Managed Evolution Alternative Investment Fund *Third Quarter, 2011
36. SAS portfolios are designed to deliver “defensive” and “offensive” strategies Each of the over 70 different strategies available for SAS is actively managed, follows a rules-based discipline, and has its own set of offensive and defensive tools: Rotating toward strength and avoiding weak assets Stop loss limits Tactical market indicators Bonds, stock and alternatives diversification Hedging against increased volatility Shifting to cash or inverse funds during market meltdowns Strategic diversification
37. Advisor tools & resources Manage client expectations with OnTarget Investing Easily illustrate strategy performance through Flexible Plan’s Research Reports Professionally designed marketing materials Excellent, friendly client service center
38. OnTarget Investing The quarterly OnTarget report provides multiple sources of discussion with clients. Each illustrated tool demonstrates that the client’s portfolio remains OnTarget: Volatility Barometer Risk Target OnTarget Monitor Defines what successful investing means to your client Monitors the client’s investment target Sets and sustains client expectations
39. 3 easy ways to illustrate to clients Source: Flexible Plan Research Reports, 1/1998-9/2011 Hypothetical Research Reports. Returns shown after fees. Disclosure Page is an integral part of this presentation.
40. Strategic High Yield Bond flyer Brochures available upon request Contact our Internal Sales Department 800-347-3539 ext. 2 or sales@flexibleplan.com
41. Doing business is easy You fax us: A recent client statement A one-page client suitability questionnaire We will send you: A personalized client proposal Appropriate research report
42. Disclosures Flexible Plan Investments does not render or offer to render personalized tax, legal or accounting advice. Do not act or refrain from acting on the basis of any content included herein without seeking the appropriate financial or other professional advice. Investments in mutual funds are subject to market risk, including the potential loss of principal invested. Flexible Plan Investments' Brochure Form ADV Part 2A carefully before investing. Fund investment return and principal value will fluctuate; an investor's account may be worth more or less than its original cost; and is subject to a number of risks that could affect its value. Investments in mutual funds are subject to market risk, including the potential loss of principal invested. Investing in the Funds may be more volatile than investing in broadly diversified funds. Current performance may be lower or higher than the performance quoted. Returns and portfolio values are provided for information purposes only and should not be used or construed as an indicator of future performance, an offer to sell, a solicitation of an offer to buy, or a recommendation for any security. Flexible Plan Investments, Ltd. cannot guarantee the suitability or potential value of any particular investment. Returns presented are after fees. The HYPOTHETICAL performance results depicted have been produced by application of selected mathematical calculation criteria to historical price data. Annual returns are compounded weekly and are inclusive of the last full trading week of the year, but may not necessarily include the last trading day of the year. Research Report results are NOT represented as actual trading or client experience nor do they reflect the impact on decision making of economic or market factors experienced during actual management of funds. Performance between selected dates may be misleading as indicative of overall performance of a strategy since the dates, chosen by the operator of the program are susceptible of having been selected to present optimum performance. The maximum investment advisory fee is 2.6% yearly, dependent upon assets under management and is deducted quarterly. Expenses of the funds or sub-accounts are included to the extent they are reflected in the NAV. Other fees may apply. Sub-accounts of variable annuities, in addition to the expenses of a mutual fund, have mortality, administrative and other charges. All expenses are required to be disclosed in each investment‘s prospectus available from your financial representative and the product provider. Distributions have been reinvested. When provided, dividends are reinvested for indexes. In those cases where indexes do not provide dividend information, those returns would be understated. As individual tax rates vary, taxes have not been considered. Various minimum-holding periods for each fund or sub-account may be utilized to comply with trading restrictions. Advisor reserves the right to change these periods. No index is directly tradable. Actual investment performance of any trading strategy may frequently be materially different than the results shown. Some funds/sub-accounts used in the model may not be available for future use. As supplemental information, a listing of all assumed trades and other data used to generate the referenced results is available upon requests. Inquiry for more current results is advised. Inherent in any investment is the potential for loss as well as the potential for gain. A list of all recommendations made within the immediately preceding year is available upon written request. The performance data quoted on reverse represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate; and investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. Inherent in any investment is the potential for loss as well as the potential for gain. A list of all recommendations made within the immediately preceding 12 months is available upon written request.

43. Get Started Right Away!

    Contact our Sales Team for a secure password and a personally guided tour of the advisor tools available to you Email: sales@flexibleplan.com Phone: 800-347-3539 ext 2 or 248-642-6640 (Metro Detroit)