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Risk Management: Combining Strategic and Tactical Aprpoaches to Investment Management - Mark Ukrainskyj, CFA®, AEPG Wealth Strategies
 

Risk Management: Combining Strategic and Tactical Aprpoaches to Investment Management - Mark Ukrainskyj, CFA®, AEPG Wealth Strategies

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Mark Ukrainskyj, CFA®, AEPG Wealth Strategies - Speaker at the IFG Wealth Management Forum, held in Phoenix, AZ, delivered his presentation entitled Risk Management: Combining Strategic and Tactical ...

Mark Ukrainskyj, CFA®, AEPG Wealth Strategies - Speaker at the IFG Wealth Management Forum, held in Phoenix, AZ, delivered his presentation entitled Risk Management: Combining Strategic and Tactical Aprpoaches to Investment Management

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    Risk Management: Combining Strategic and Tactical Aprpoaches to Investment Management - Mark Ukrainskyj, CFA®, AEPG Wealth Strategies Risk Management: Combining Strategic and Tactical Aprpoaches to Investment Management - Mark Ukrainskyj, CFA®, AEPG Wealth Strategies Presentation Transcript

    • Risk Management: Combining Strategic andTactical Approaches to Investment ManagementMark Ukrainskyj, CFAIFG Wealth Management ForumApril 24, 2012 AEPG Wealth Strategies 25 Independence Blvd “Consistently Good Advice in a Constantly Changing World”™ Warren, NJ 07059 908-757-5600 www.aepg.com
    • Risk Management: Combining Strategic and TacticalApproaches to Investment Management Mark Ukrainskyj CIODisclosure AEPG Wealth Strategies IMPORTANT DISCLOSURE INFORMATION American Economic Planning Group, Inc. (“AEPG”) is an SEC registered investment adviser located in Warren, New Jersey. AEPG and its representatives are in compliance with the current filing requirements imposed upon SEC registered investment advisers by those states in which AEPG maintains clients. AEPG may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. AEPG’s web site is limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links. Accordingly, the publication of AEPG’s web site on the Internet should not be construed by any consumer and/or prospective client as AEPG’s solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet. Any subsequent, direct communication by AEPG with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For information pertaining to the registration status of AEPG, please contact the SEC or the state securities regulators for those states in which AEPG maintains a notice filing. A copy of AEPG’s current written disclosure statement discussing AEPG’s business operations, services, and fees is available from AEPG upon written request. AEPG does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to AEPG’s web site or incorporated herein, and takes no responsibility therefor. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy (including those undertaken or recommended by AEPG), will be profitable or equal any historical performance level(s). Certain portions of this presentation and AEPG’s web site (i.e. newsletters, articles, commentaries, etc.) may contain a discussion of, and/or provide access to, AEPG’s (and those of other investment and non-investment professionals) positions and/or recommendations as of a specific prior date. Due to various factors, including changing market conditions, such discussion may no longer be reflective of current position(s) and/or recommendation(s). Moreover, no client or prospective client should assume that any such discussion serves as the receipt of, or a substitute for, personalized advice from AEPG, or from any other investment professional. AEPG is neither an attorney nor an accountant, and no portion of the web site content should be interpreted as legal, accounting or tax advice. Rankings and/or recognition by unaffiliated rating services and/or publications should not be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if AEPG is engaged, or continues to be engaged, to provide investment advisory services, nor should it be construed as a current or past endorsement of AEPG by any of its clients. Rankings published by magazines, and others, generally base their selections exclusively on information prepared and/or submitted by the recognized adviser. Each client and prospective client agrees, as a condition precedent to his/her/its access to AEPG’s web site, to release and hold harmless AEPG, its officers, directors, owners, employees and agents from any and all adverse consequences resulting from any of his/her/its actions and/or omissions which are independent of his/her/its receipt of personalized individual advice from AEPG. Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this newsletter (article) (including the investments and/or investment strategies recommended or undertaken by American Economic Planning Group, Inc.), will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter (article) serves as the receipt of, or as a substitute for, personalized investment advice from American Economic Planning Group, Inc. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. A copy of our current written disclosure statement discussing our advisory services and fees is available for review upon request.“Consistently Good Advice in a Constantly Changing World”™
    • Risk Management: Combining Strategic and TacticalApproaches to Investment Management Mark Ukrainskyj CIOAgenda AEPG Wealth Strategies Define Short History Approach Cases“Consistently Good Advice in a Constantly Changing World”™
    • Risk Management: Combining Strategic and TacticalApproaches to Investment Management Mark Ukrainskyj CIODefinitions AEPG Wealth Strategies Strategic •a long-range plan for achieving something or reaching a goal, or the skill of making such plans Tactical •done in order to get a particular result“Consistently Good Advice in a Constantly Changing World”™
    • Risk Management: Combining Strategic and TacticalApproaches to Investment Management Mark Ukrainskyj CIOTraditional Stock Diversification AEPG Wealth Strategies US Stocks International Stocks Large Large Large Large Value Core Growth Mid Mid Value Mid Core Mid Growth Small Small Small Small Value Core Growth“Consistently Good Advice in a Constantly Changing World”™
    • Risk Management: Combining Strategic and Tactical Approaches to Investment Management Mark Ukrainskyj CIO Traditional Portfolio Diversification AEPG Wealth Strategies Stocks Bonds“Consistently Good Advice in a Constantly Changing World”™
    • Risk Management: Combining Strategic and Tactical Approaches to Investment Management Mark Ukrainskyj CIO AEPG Wealth Updated ‘Traditional’ Portfolio Diversification Strategies Stocks Bonds REITS/ Alternatives Commodities Real Estate“Consistently Good Advice in a Constantly Changing World”™
    • Risk Management: Combining Strategic andTactical Approaches to Investment Management Mark Ukrainskyj CIO Return/Correlation vs. MSCI World 1/92 -6/08 AEPG Wealth Strategies 14% Hedge Funds REITs 12% Commodities Stocks 10% Treasury Indexes Fund of Funds MSCI ACWI Wilshire 5000 (Full Cap) MSCI EAFE 8% MSCI EM (EMERGING MARKETS) Russell 1000 Return Russell 2000 High Yield Barclays Capital U.S. Aggregate Corporates Barclays Capital U.S. Treasury: 1-3 Year Barclays Capital U.S. Treasury: 7-10 Year 6% Barclays Capital U.S. Treasury: Long BofA Merrill Lynch US Treasury Master BofA Merrill Lynch US Corporate Master BofA Merrill Lynch High Yield Master II BofA Merrill Lynch Mortgage Master Aggregate, Mortgages, Munis BofA Merrill Lynch Municipal Master 4% Dow UBS Commodity Index Wilshire REIT HFRI Fund of Funds Composite Index HFRI Fund Weighted Hedge Fund Index 2% 0% -0.2 0 0.2 0.4 0.6 0.8 1 Correlation vs. MSCI WORLD Source: Zephyr“Consistently Good Advice in a Constantly Changing World”™
    • Risk Management: Combining Strategic andTactical Approaches to Investment Management Mark Ukrainskyj CIO Return/Correlation vs. MSCI World 7/08 – 12/08 AEPG Wealth Strategies 30% Treasuries and Mortgages 20% Treasury 1-3 10% Years Aggregate 0% MSCI ACWI Munis Wilshire 5000 (Full Cap) Corporates MSCI EAFE MSCI EM (EMERGING MARKETS) -10% Russell 1000 Return Hedge Funds and FoFs Russell 2000 Barclays Capital U.S. Aggregate Barclays Capital U.S. Treasury: 1-3 Year Barclays Capital U.S. Treasury: 7-10 Year -20% Barclays Capital U.S. Treasury: Long Stocks & High Yield BofA Merrill Lynch US Treasury Master BofA Merrill Lynch US Corporate Master BofA Merrill Lynch High Yield Master II -30% BofA Merrill Lynch Mortgage Master BofA Merrill Lynch Municipal Master Dow UBS Commodity Index REITs Wilshire REIT HFRI Fund of Funds Composite Index -40% HFRI Fund Weighted Hedge Fund Index Commodities -50% -60% -0.6 -0.4 -0.2 0 0.2 0.4 0.6 0.8 1 Correlation vs. MSCI WORLD Source: Zephyr“Consistently Good Advice in a Constantly Changing World”™
    • Risk Management: Combining Strategic and Tactical Approaches to Investment Management Mark Ukrainskyj CIO 2008 Returns for Market Indices (%) AEPG Wealth Strategies Fears of global recoupling hurt High quality fixed income US equities outperformed emerging markets was the leader in 2008 non-US equities FTSE/ Barclays Russell Russell EPRA Barclays GS Barclays High Russell Russell Russell Mid Russell DJ Russell Mid Global MSCI Muni ART High Yield 2000 Russell 1000 S&P Russell 1000 Cap 2000 Wilshire Mid MSCI Cap S&P Real Emerging MSCI Agg Index Yield Muni Value 2000 Value 500 1000 Growth Value Growth RESI Cap EAFE Growth GSCI Estate Markets BRICsBarclays Barclays 3 US Agg MonthTreasury T-Bill Small caps: equity leaders despite the turbulence After rallying in the first half of the year, a precipitous drop in oil prices drove commodity returns negative Source: Bloomberg “Consistently Good Advice in a Constantly Changing World”™
    • Risk Management: Combining Strategic and Tactical Approaches to Investment Management Mark Ukrainskyj CIO Historical Returns AEPG Wealth Strategies When Stocks Fall, Government Bonds Usually Rise U.S. Intermediate Government Bonds S&P 500 Index Years in which the S&P 500 showed a negative returnSource: Ibbotson Associates. Selected years shown represent all calendar years from 1929 to 2008 in which the S&P 500 Index had a negative total return. U.S. Intermediate-Term Government Bonds are represented by the 1-10 year U.S.Government Bond Index. Past performance is not indicative of future results. Please note that indices are unmanaged and do not take into account any fees or expenses of investing in the individual securities that they track, and that individualscannot invest directly in an index. “Consistently Good Advice in a Constantly Changing World”™
    • Risk Management: Combining Strategic and TacticalApproaches to Investment Management Mark Ukrainskyj CIORecent Historical Returns AEPG Wealth Strategies Index Performance 7/26/11 – 10/4/11 27.7% 4.3% MSCI ACWIMI S&P 500 DJ UBS Commodity DJ REIT Index Intermediate Term Long Term Index Treasuries Treasuries -10.4% -15.6% -14.7% -21.5% MSCI ACWIMI S&P 500 DJ UBS Commodity Index DJ REIT Index Intermediate Term Treasuries Long Term Treasuries Source: Bloomberg and Ibbotson Associates“Consistently Good Advice in a Constantly Changing World”™
    • Risk Management: Combining Strategic and TacticalApproaches to Investment Management Mark Ukrainskyj CIOTactical Diversification History AEPG Wealth Strategies Minimal Use •Sector or Asset Class Over/Under Weights“Consistently Good Advice in a Constantly Changing World”™
    • Risk Management: Combining Strategic and TacticalApproaches to Investment Management Mark Ukrainskyj CIO Portfolio Structure AEPG Wealth Strategies Low Risk Risk Based US Treasury Core Equity Satellite Income Model Investments Investments Tactical Short Strategic Long Term Term“Consistently Good Advice in a Constantly Changing World”™
    • Risk Management: Combining Strategic and TacticalApproaches to Investment Management Mark Ukrainskyj CIOLow Risk AEPG Wealth Strategies Treasuries - Low Risk Bond Model with staggered maturities Low Risk Safe money Provides cash flow for distribution Treasuries will appreciate in value US Treasury during periods of sharp decline in the Model equity markets Strategic Long Term“Consistently Good Advice in a Constantly Changing World”™
    • Risk Management: Combining Strategic and TacticalApproaches to Investment Management Mark Ukrainskyj CIORisk Based AEPG Wealth StrategiesStrategic Risk Based Assets Income Investments High Quality Income Stream Risk Based Investment Grade Spread Investments Core Equities Core Equity Low Cost Beta Exposure Income Investments Individual stocks Exchange Traded Funds (ETFs) Tracks global equity index Strategic Long Term Low cost third party manager“Consistently Good Advice in a Constantly Changing World”™
    • Risk Management: Combining Strategic and TacticalApproaches to Investment Management Mark Ukrainskyj CIORisk Based AEPG Wealth Strategies Tactical Risk Based Assets Alpha Generation Risk Based Risk Management Possible Satellite Investments Cash Sector Funds Satellite Country/Regional Funds Investments Market Cap or Style ETF’s Commodities Alternative ETF’s Tactical Short Term High Yield Bonds Investment Grade Bonds US Treasuries & TIPS“Consistently Good Advice in a Constantly Changing World”™
    • Risk Management: Combining Strategic and TacticalApproaches to Investment Management Mark Ukrainskyj CIOCore Satellite AEPG Wealth Strategies Advantages Satellite Satellite Core Equities - Strategic Low Cost Broad Based Tax Loss Harvesting Satellite - Tactical Satellite Core Satellite Flexible Tactical Concentrated Risk Management Hedging Satellite Satellite“Consistently Good Advice in a Constantly Changing World”™
    • Risk Management: Combining Strategic and TacticalApproaches to Investment Management Mark Ukrainskyj CIOSatellite AEPG Wealth Strategies Process Set/Limit Number of Satellites Research Possible Investments Analyze Primary Drivers and Risks Identify Specific Entry and Exit points Set Risk Management Parameters Execution/Discipline“Consistently Good Advice in a Constantly Changing World”™
    • Risk Management: Combining Strategic and TacticalApproaches to Investment Management Mark Ukrainskyj CIOSatellite AEPG Wealth Strategies Research Qualitative Quantitative Technical“Consistently Good Advice in a Constantly Changing World”™
    • Risk Management: Combining Strategic and TacticalApproaches to Investment Management Mark Ukrainskyj CIOSatellite Example AEPG Wealth Strategies Satellite Activity 6/30/11 – 9/30/11 100% 90% 80% Cash 70% 60% Bonds 50% 40% 30% 20% Equity 10% 0% Equity Bonds Cash“Consistently Good Advice in a Constantly Changing World”™
    • Risk Management: Combining Strategic and TacticalApproaches to Investment Management Mark Ukrainskyj CIOSatellite Example AEPG Wealth Strategies Risk Management Example #1 6/30/11 – 9/30/11 Source: Bloomberg“Consistently Good Advice in a Constantly Changing World”™
    • Risk Management: Combining Strategic and TacticalApproaches to Investment Management Mark Ukrainskyj CIOSatellite Example AEPG Wealth Strategies Risk Management Example #2 3/30/11 – 4/13/12 Source: Bloomberg“Consistently Good Advice in a Constantly Changing World”™
    • Risk Management: Combining Strategic and TacticalApproaches to Investment Management Mark Ukrainskyj CIOSummary/Benefits AEPG Wealth Strategies Structural Diversification Risk Management Low Costs Alpha Generation Tax Management“Consistently Good Advice in a Constantly Changing World”™
    • Risk Management: Combining Strategic and Tactical Approaches to Investment Management Most Influential Advisors of “ Defined Contribution ”“ Best Financial Advisors for Dentists by 401kWire November 2010 “ Best Financial Advisors for Doctors by Medical Economics Magazine ” ” by Dental Practice Magazine April 2011 November 2010 “ Top RIA Ranking by Financial Advisor Magazine ” “ Top 100 Retirement Plan Advisors in 2010 June 2010 “ New Jersey Top 401(k) Defined Contribution Providers by PLANADVISOR ” January 2011 ” by NJ Biz September 2010 “ Top 50 Wealth Managers by AdvisorOne.com ” “ Fastest Growing Advisory Firms June 2010 “ Top Wealth ” by Investment Advisor Magazine Management Firms 2002 - 2009 ” “ Top 5 RIA’s in NJ by Reuters Advice Point ” by Wealth Manager Magazine “Consistently Good Advice in a Constantly Changing World”™