Presentation Transcript

1. DYNAMIC RISK-MANAGED INVESTMENT SOLUTIONS SINCE 1981
2. Special guest speakers Jason Teed Assistant Manager, Research, Flexible Plan Ken Whitley Corporate Secretary and Managing Director, Special Projects, Flexible Plan FarhanSharaff Assistant Chief Investment Officer, Equities Senior Managing Director, Guggenheim Investments Peter Mauthe Vice President – Corporate Development, Flexible Plan
3. Firm history Contracts with approximately 600 financial firms Focuses on preserving and growing capital through a robust active management approach combined with risk management Provides strategic diversification within a single client account at a low account minimum Early pioneers of active investment management and founding member of NAAIM National Association of Active Investment Managers Sets investor expectations with OnTarget Investing then manages and monitors those expectations
4. Proprietary, quantitative algorithm designed to combine index asset classes and dynamic risk-managed trading strategies into a single, diversified portfolio that is superior to the sum of its parts. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
5. Total diversification across three dimensions MULTI-MARKET MULTI-STRATEGY MULTI-MANAGER Manager External sub-advisors and in-house programs Asset Class Stocks, Bonds, Commodities Strategy Style PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
6. Portfolio tools PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
7. Portfolio construction Incompatible strategies are dropped and newly developed strategies are automatically added to the extensive universe of strategies considered for reallocation monthly Draws on a universe of over 45 strategies, asset classes, and suitability-based portfolio profiles created by Flexible Plan and its third-party sub-advisors. Strategies are selected using a multi factor-proprietary (non-MPT) algorithm that also creates custom position sizing for each strategy in each portfolio profile Index funds Newly developed strategies FUSION PORTFOLIO Actively managed strategies Incompatible strategies PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
8. Correlations The FUSION engine takes into consideration the relationships and correlations between strategies and responds to how each performs within different market environments. The strategies are chosen for their combined robustness across all market conditions. combined robustness
9. Volatility and correlation
10. Drawdown analysis Source: FPI model performance; returns are net of 2.6% maximum advisory fee. THESE RESULTS DO NOT REPRESENT ACTUAL TRADING OR CLIENT EXPERIENCE. Please read Flexible Plan Investments’ Brochure Form ADV Part 2A carefully before investing.
11. Monthly reallocation SUN MON TUE WED THU FRI SAT While the allocation of strategies that make up the portfolio are updated monthly, the individual strategies themselves may trade daily.
12. Performance comparison based on platform Source: FPI model performance; returns are net of 2.6% maximum advisory fee. NYSE Group, Inc. INVESTORS CANNOT INVEST DIRECTLY IN AN INDEX. THESE RESULTS DO NOT REPRESENT ACTUAL TRADING OR CLIENT EXPERIENCE. Please read Flexible Plan Investments’ Brochure Form ADV Part 2A carefully before investing.
13. Effect of reallocation date on short-term performance Source: FPI model performance; returns are net of 2.6% maximum advisory fee. NYSE Group, Inc. INVESTORS CANNOT INVEST DIRECTLY IN AN INDEX. THESE RESULTS DO NOT REPRESENT ACTUAL TRADING OR CLIENT EXPERIENCE. Please read Flexible Plan Investments’ Brochure Form ADV Part 2A carefully before investing.
14. Fusion Prime allocations comparison Allocations based March 2014.
15. Summary Investing through the full market cycle Not based on emotion, quantitative-based approach Fusion is behaving as designed Different custodians may have different performance over short periods of time
16. Equity Markets Perspective
17. Managing investor expectations Helping investors reach their investment goals The OnTarget Report provides multiple sources of discussion with clients using illustrated tools to demonstrate aspects of the investor’s portfolio in relation their benchmark.
18. Managing investor expectations OnTarget Monitor High outcome20% probability of reaching this or higher Target outcome60% probability of reaching this or higher Low outcome80% probability of reaching this or higher
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21. IMPORTANT DISCLOUSURES This presentation is 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 index. These results do NOT represent actual trading or client experience, and do not reflect the impact of decision making or economic or market factors experienced during actual management of funds. The actual return may be lower or higher than the performance quoted. Annual returns are compounded monthly. Performance between selected dates may be misleading as indicative of overall performance of an index. The FPI FusionSM and Self-adjusting Trend Following Indexes (the “Indexes”) are calculated by NYSE Group, Inc. or its affiliates (“NYSE Group, Inc.”). The FPI FusionSM and Self-adjusting Trend Following Index strategies or managed accounts, which are based on the Indexes, are not issued, sponsored, endorsed, sold or promoted by NYSE Group, Inc., and NYSE Group, Inc. makes no representation regarding the advisability of investing in such product. NYSE GROUP, INC. MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE FPI FUSIONSM AND SELF-ADJUSTING TREND FOLLOWING INDEXES OR ANY DATA INCLUDED THEREIN. IN NO EVENT SHALL NYSE GROUP, INC. HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES. It does not predict or project the performance of an investment or investment strategy as one cannot invest directly in an index. While FPI’s Fusion strategies are based on the Fusion Indexes, and the FPI STF strategy is based on the STF Index, the indexes reflect the theoretical performance an investor would have obtained had it invested in the manner shown and does not represent returns an investor actually attained, as investors cannot invest directly in an index. No representation is being made that any client will or is likely to achieve results similar to those presented herein. Fusion is predicated on combining multiple, dynamically risk-managed strategies into a single portfolio which is designed to add an extra level of risk-reduction and return to navigate diverse market environments, black swans, and uncertainty. It considers three different factors in a proprietary (post-Modern Portfolio Theory) methodology consistently applied over the period shown to generate trading strategy exposure: 1) momentum or relative strength of each strategy; 2) volatility or risk of each strategy; and 3) correlation of each strategy to other strategies in a portfolio context. The Fusion Indexes are constructed illustrating the historical allocated performance from various sources, including actual returns of FPI’s model account strategies, ETFs and open-end mutual funds (including long/short and/or leveraged funds). From January 1998 to December 2013, Fusion Index performance was calculated by FPI. Index calculations from January 2014 forward were performed by the NYSE Group, Inc. From January 1998 to December 2013, there have been no assets managed under the Index rules at FPI. The Fusion mathematical algorithm has been in use by FPI since February, 2013. FPI reserves the right to make enhancements to the Index methodology. The Fusion Indexes and the STF Index contain no management or advisory fees, other than the internal fees and expenses reflected in the NAV of the mutual funds or ETFs used. A client account in a FPI offered Fusion strategy will incur advisory fees; additional fees may apply including transactions and trading costs determined by the Custodian of the account. These fees and costs will decrease the return experienced by a client. Individual client account results will vary from the Fusion Index returns. Current and prospective clients should not assume that future performance will be the same or profitable. 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.
22. Model Account" Rate of Return Report “Model Account” results for the identified investment management strategy shown are time weighted geometrically linked returns. Except where noted, statistics are taken from single strategy accounts and are representative of our largest mutual fund and variable annuity holdings. These returns reflect actual accounts and dates of Flexible Plan's buy and sell signals. If an account terminates during a period, an alternative single account is substituted. Selection of accounts to serve as “model accounts” is based on the longevity of the account and least number of additions and withdrawals. Accordingly, many of the single accounts serving as ‘models’ are titled in the name of Flexible Plan’s President and controlling shareholder, a person related to Flexible Plan. If single strategy account histories are unavailable, statistics applicable to such accounts are derived from the exchange history files of each strategy used. Actual buy-sell trading signals and pricing are used in conjunction with such files to create the applicable statistics for each model account. These exchange-history derived returns are believed representative of each strategy’s actual results, but the results do not represent the actual experience of any client during the period. Therefore, these results may not reflect the impact that material economic and market factors might have had on the results. Nor do they reflect any problems of execution or pricing that may have been encountered in the actual implementation of the buy and sell signals shown in the exchange history files, the effect of which has not been determined, and may be indeterminable. Enhancements have been made in our methodologies on numerous occasions, which are believed to have had a positive effect on returns. The amount is not precisely quantifiable, but as strategy actual buy and sell signals are used, to the extent described, the effect of these enhancements is reflected. Efforts to develop indicators are ongoing and may result in further changes. Dividends are reinvested. Utilizing performance between selected dates may not be indicative of overall performance of a profile since the dates chosen by the operator of the program may have been selected to present optimum performance and may not be representative of investment performance of any profile during a different period. Inquiry for current results is always advised. Mutual fund or annuity results will vary based upon their volatility as they relate to the S&P 500 Index or other indices that may be shown. Specific mutual funds, sub-accounts or indices may materially outperform or under perform these results. Various mutual funds or sub-accounts used in any model account may no longer be available due to the result of advisor's, sponsor's, or fund advisor's periodic review, fund consolidations and/or exchange conditions imposed by the funds or annuity. References to popular market indexes are included to demonstrate the market environment during the period shown and are not intended as 'benchmarks.' Index returns are after dividends. Since Index dividends are posted after the end of each month, they are retroactively prorated on a daily basis (which tends to understate returns if the end date range is inclusive of the current partial month). The Dow Jones Corporate Bond Index includes fixed rate debt issues rated investment grade or higher by national rating services. Investments by bond funds utilized in generating the above returns may not be similarly rated. The investment program for the accounts included in the profiles includes trading and investment in securities in addition to those that may be included in the S&P 500. Such indexes may not be comparable to the identified investment strategies due to the differences between the indexes' and the strategies' objectives, diversification, represented industries, number and type of component investments, their volatility and the weight ascribed to them. No index is a directly tradable investment. After Fees If this presentation is calculated with the maximum current management fee, the maximum current management fee in effect is 2.6% (1.75% for group retirement plans). Prior to December 31, 1995, Classic fees were deducted quarterly at the rate of 2.8% annually and at 2.6% thereafter. Effective January 1, 1996, actual fees varied between 0.9 and 2.6% annually, depending on assets under management, and are billed quarterly. Strategic Solutions and Managed Solutions and, effective July 1, 2003, Evolution fees are deducted quarterly, in arrears at the rate of 2.6% annually, with pro-ration of partial periods. Actual management fees will vary between 1.0% and 2.6% annually. Returns for certain programs/product families are shown before withdrawal of a maximum establishment fee of 1.2% unless the selected date range includes the inception date (start date) and if the solicitor firm allows the use of an establishment fee. Schwab (Load) ETF Market Leaders Strategy accounts include ETF trading commissions of $860 annually prorated and applied quarterly. All mutual fund fees and expenses are included to the extent they are reflected in net asset value; other fees may apply. If a front-end fund purchase is contemplated, any commission charged should be deducted. As individual tax rates vary, taxes have not been considered.
23. Before Fees, or Reduced Fees If this presentation is calculated without the maximum current management fee, the investment returns may be inflated and this presentation is not for public distribution. It is to be used solely in “one on one” presentations where clients or prospective client has full opportunity to discuss the types and amounts of fees and expenses. Returns would be reduced by such payments and the impact would be magnified by the effect of compounding if such payments were withdrawn from the account. For example, the payment of annual advisory fees of 2% of the year end account values would reduce a gross five-year compound annual rate of return of 8.5% to 6.3%. On a cumulative basis using such assumptions, $100,000 would grow to $135,900, versus $150,400 without fees. The payment of an establishment fee of 1.2% of the initial account value would reduce a gross five-year compound annual rate of return of 6.3% to 6.1%. On a cumulative basis using such assumptions, $100,000 would grow to $134,300 versus $135,900. Fees are not taken into account in computing Annualized risk, Beta or Maximum loss (daily). Since monthly maximum loss is after fees, there may be an occasion when monthly max loss may exceed daily max loss. ASSET CLASS RISK CONSIDERATIONS US and Global Bonds: All investments involve risk. Special risks associated with investing in bonds include fluctuations in interest rates, inflation, declining markets, duration, call and credit risk. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size and lesser liquidity. Commodities: Concentrating investments in natural resources industries can be affected significantly by events relating to those industries, such as variations in the commodities markets, weather, disease, embargoes, international, political and economic developments, the success of exploration projects, tax and other government regulations and other factors. US and Global Real Estate: Investments in Real Estate are subject to changes in economic conditions, credit risk and interest rate fluctuations Global Currencies: Foreign currency exchange rates may fluctuate significantly over short periods of time. They generally are determined by supply and demand in the foreign exchange markets and relative merits of investments in different countries, actual or perceived changes in interest rates, and other complex factors. Currency exchange rates also can be affected unpredictably by intervention (or the failure to intervene) by U.S. or foreign governments or central banks, or by currency controls or political developments. Long / Short Directional: Portfolio may invest in derivative investments such as futures, contracts, options, swaps, and forward currency exchange contracts that may be illiquid or increase losses due to the use of leveraged positions. US and Global Equities: In addition to the foreign investment risks noted above, the principal risks associated with equities include market, portfolio management, and sector risks. Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges and expenses. You can request a prospectus by contacting your financial advisor. Please read the prospectus carefully before investing. Investment value will fluctuate, and shares, when redeemed, may be worth more or less than original cost. Performance for the period, generally encompassing 1999 and the first quarter of 2000 was driven by substantial price appreciation in a small number of equity issues, notably in technology sectors, traded primarily on the NASDAQ. Such performance is historical information and should not be relied upon as representative of investment performance of any strategy to the current date nor be extrapolated into expectations for the future. Inquiry for current results is advised, in light of the adverse market performance of many indices commencing in 2000. 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 year is available upon written request. Please read Flexible Plan Investments' Brochure Form ADV Part 2A carefully before investing. INVESTORS CANNOT INVEST DIRECTLY IN AN INDEX. THESE RESULTS DO NOT REPRESENT ACTUAL TRADING OR CLIENT EXPERIENCE. Ver. Index Disclosure + STF + Models 5/1/14