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Model Wealth Portfolios - Deep Dive
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Model Wealth Portfolios - Deep Dive

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Whether it’s building a comfortable retirement, establishing a legacy for your loved ones or generating wealth, we all invest with goals in mind.

Whether it’s building a comfortable retirement, establishing a legacy for your loved ones or generating wealth, we all invest with goals in mind.

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  • We’ll begin withLPL Financial Research, our in house objective strategist on the platform.
  • LPL Financial Research consists of accomplished industry veterans, comprising one of the largest and most experienced research groups among independent firms. They provide unbiased, objective recommendations, and are able to do so because they do not have proprietary investment products to sell, investment banking relationships to promote, or any other business conflicts that may influence their advice.Based on fundamental, valuation and technical analyses, LPL Financial Research evaluates the global financial markets to determine its market outlook. Then, the team evaluates a broad universe of investments, using both qualitative and quantitative assessments, to find the most appropriate mutual funds and/or Exchange Traded Products that align with its market view. Finally, the team assembles portfolios to suit each MWP client-focused theme, positioned to potentially perform best under the current market scenario. LPL Research portfolios are continually monitored and adjusted as market dynamics change -- either to help take advantage of opportunities or to protect against the downsides.
  • LPL Financial Research offers a model in each investment theme. Their strategies range from conservative to aggressive. If appropriate for your portfolio, I will work with you to determine which of LPL Financial Research models are the best fit for you.
  • AlphaSimplex Group's investment philosophy is based on the ‘Adaptive Market Hypothesis’ which states that portfolios must adapt to changing market conditions.
  • AlphaSimplex Group specializes in risk-managed investment strategies. Their founder and Chief Investment Officer, Dr. Andrew Lo is a widely recognized authority on behavioral finance and alternative investing developed the Adaptive Markets Hypothesis, which states that the most successful strategies are those that can adapt to changing market conditions. This belief is the foundation for ASG’s investment philosophy and the basis for the LPL Financial Risk-Efficient Models.A risk-efficient strategy makes managing risk the top priority. Essentially, when the market is giving signs of risk, the portfolio cuts back on risky investments. When the market gives signs of less risk, the portfolio adds risk back to the portfolio. This strategy is not intended to outperform stocks and bonds during market rallies, but rather stabilize risk in all market conditions. As market conditions change, the portfolios shift assets strategically between riskier asset classes and those that are less volatile or offer the greatest diversification.
  • AlphaSimplex Group offers three different portfolios; conservative, moderate and aggressive. The distinction here is how much risk the portfolio stabilizes. The aggressive portfolio stabilizes the most risk, conservative the least, and the moderate, right in the middle.
  • BlackRock provides global scale and insights with institutional-quality risk management. They build well-diversified portfolios using a broad range of asset classes in a risk-aware mannerand identify opportunities through fundamental research and in-depth, highly focused, independent expertise from BlackRock's global scale and 'information advantage.' Though these factors are not a guarantee of enhanced portfolio return, it provides a process for diversification and risk management.
  • BlackRock offers 4 model series offered in Model Wealth Portfolios along a range of investment objectives (Conservative through Aggressive).The Strategic Series can be used as a primary building block if you want immediate diversification. These models can also be used as a core portfolio holdingThe Tactical Series incorporates the same baseline of diversification as the Strategic Series. However – it includes the team’s fundamentally driven tactical insights. These models could be positioned as a ‘complete solution’. The Alpha/Beta Blends brings together BlackRock’s macro asset allocation views and security selection through their range of mutual funds. The Mutual Fund models combine the best of BlackRock mutual funds with a small sampling of ETFs.
  • Cougar Global Investments believes the goal of investing is to generate compound growth that achieves your investment objectives. The primary means of achieving adequate compound growth is to avoid losing money.
  • Dr. James Breech founded Cougar Global in 1993, the approach he developed was to measure risk as the failure to meet a “Minimum Acceptable Return” goal for the investors. Cougar Global attempts to avoid downside risk, and participate in upside opportunities. They have developed a unique approach to global investing. The investment process incorporates leading edge research into 1) the behavior of capital markets and 2) proprietary portfolio optimization.Cougar assesses the probability of five macroeconomic scenarios: Growth, Recession, Stagnation, Inflation and Chaos to determine how to optimize the portfolio. Cougar Global is then able to forecast scenarios and enter results into a proprietary portfolio optimizer in order to generate the optimal asset mix for each of their portfolios.
  • Cougar Global Investments offers four portfolios each with the same philosophy, but with varied amounts of risk. The “Mar” or Minimum Acceptable Return” 12, the most aggressive portfolio allows for a 20% or less probability of negative returns. The most conservative model, Mar 6, allows for only 5% or less probability of negative returns.
  • Innealta Capital is a quantitative asset manager that uses tactical multi asset class ETF portfolios.
  • Innealta Capital is a division of Al Frank Asset Management (AFAM), a 34 year-old boutique asset management firm. Innealta has extensive experience managing multi-asset class. Innealta’s investment management team exercises a conservative approach focused on risk management and the core tenet of “Winning by Not Losing.” The firm’s investment process is governed by a disciplined, repeatable quantitative and econometric framework created by its Founder and Chief Investment Officer, Dr. Jeff Buetow, throughout his lengthy career. The framework is designed to determine attractive environments for equities and tactically alter asset class exposure to capitalize on favorable risk-adjusted investment opportunities for one asset class over another. The philosophy behind this process is to provide and construct for movement between asset classes that allows for risk adjusted returns regardless of the market environment. The quantitative framework consists of four sub components – Risk, Fundamentals, Economy, and Technicals – which cover all major aspects of the investment climate.
  • Innealta Capital offers 6 Tactical ETF portfolios that fall under three categories: Rotation, Risk-Based, and stand alone Fixed Income.The Rotation Portfolios tactically alter exposures among the 10 S&P 500 GICS sectors in the Sector Rotation Portfolio and 28 international countries in the Country Rotation Portfolio based on the specific risk/reward characteristics of each. Dollars not allocated to equities are invested in an actively managed portfolio of fixed income ETFs. Sectors and countries are equally weighted: 10% is potentially given to each sector; 5% to each country.The Risk Based Portfolios apportion assets to equity classes based on the specific risk/reward characteristics of each. Dollars not allocated to equities are invested in a basket of primarily fixed income ETFs. Bullish or bearish signals generated by the quantitative model are used to adjust equity exposure within each portfolio by +/-20% relative to the long-term strategic asset allocation target of the portfolio in order to try to capture enhanced risk-adjusted returns. The Fixed Income Portfolio aims to generate above average yield with strict risk controls by consistently investing in those fixed income sectors that have strong risk-adjusted performance potential and eligible exchange traded fund representation. The portfolio is operated within a quantitative framework that seeks to objectively control the portfolio level yield, modified duration and volatility.
  • J.P. Morgan Asset Management believes in reducing volatility and allocating assets in a way to maximize growth potential.
  • J.P. Morgan Asset Management has more than $1.2 trillion in assets under management and a global network of nearly 300 analysts averaging 15 years experience. They create portfolios by understanding both the big picture of current economics and details on individual positions over an investment cycle.The Global Asset Management Group believes that your most important investment decision is how to allocate assets – the process of dividing your portfolio across different asset classes, such as stocks and bonds. Additionally, in reducing volatility. When you invest in only one asset class, your entire portfolio suffers when that area of the market declines. GMAG strives to diversify your return potential. Stock and bond returns don’t always correlate. One may be up when the other is down and may cushion the loss, reduce risk and provide more consistent performance.Most importantly, they believe in helping you pursue your goals. I can help you select one of their models to create an asset mix that reflects your timeframe, return expectations and risk tolerance.
  • JP Morgan offers models for investors who want to focus on capital appreciation, who are risk aware, or who are tax conscious. All models use JP Morgan’s proprietary funds and are highly diversified. Their models are constructed with a longer time frame in mind, but yet will make adjustments to the portfolio if a significant opportunity arises.
  • Morningstar Investment Services’ philosophy is built on the belief that portfolios should maintain a risk profile commensurate with the desired long-term asset allocation guidelines provided to the client. They focus extensively on maintaining a careful balance between being allocated similarly to portfolio benchmarks and reflect their assessment of the values available in the current market.
  • No matter which investment approach you chose, the model portfolios Morningstar Investment Services offers are designed to be part of a strategy that supports your financial well-being. Each portfolio is built for the long term and managed with a keen eye on risk in order to help your advisor put your needs front and center, where they belong.Morningstar employs a disciplined, consistent investment process. They actively manage portfolios to help take advantage of market opportunities, while being sensitive to costs and taxes. They believe in investing your money as if it were their own, and make communicating in a timely and candid fashion a priority. Could be considered as core holdings and built for the long term, their offerings are a natural extension of the Morningstar focus on providing innovative research and services to investors.
  • Morningstar Investment Services offers models that are well-suited to capital appreciation, risk aware and tax conscious investors. Each model is carefully managed to stay in line with its investment focus, and each is an ideal core holding.The Capital appreciation models are diversified across a broad range of asset classes, based on an asset allocation established by Ibbotson Associated. The absolute return portfolio was created to help provide downside protection when markets get volatile and the tax-sensitive portfolios emphasize tax efficiency.
  • Investments continually rotate in and out of favor, giving rise to both opportunities and risks. QA utilizes its proprietary Global Investment System to analyze relative price trends, and tactically rotate within and among traditional and alternative asset classes. In this way, they seek to capture upside opportunities, while managing downside risk.
  • This slide shows the annual difference in returns between the “leaders” and “laggards.” The gap is significant and highlights the potential benefit of selecting the right investments at the right time for your portfolio.. The return patterns of large cap growth and small cap value illustrate the power of this point and QA’s investment philosophy.Traditional “buy and hold” strategies are not designed to take advantage of rotations in investment leadership. In fact, these strategies may neutralize performance gains as leading positions are offset by lagging ones. By contrast, QA’s strategies make adaptive or dynamic “tactical” moves within and among investment categories, creating the potential for significant additional returns.QA utilizes this active investment discipline in their full suite of investment strategies, including Core, Equity Flex and Alternative strategies.
  • QA has a diverse set of models, they include traditional core strategies, Equity Flex versions that offer additional downside protection and their alternative strategy - Tactical All Market.

Transcript

  • 1. MODEL WEALTH PORTFOLIOSHelping You Meet YourFinancial Goals ThroughTheme- Based InvestingGAAM, Inc.http://www.gaaminc.comToll Free: 800-677-4445Tennessee Office: 423-247-8840Arizona Office: 480-366-5983 Member FINRA/SIPC Securities and advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC.
  • 2. Why Now? Markets have evolvedSource: J. P. Morgan, Guide to the MarketsIndexes and weights of the traditional portfolio are as follows: U.S. stocks: 55% S&P 500, U.S. bonds: 30% Barclays Capital Aggregate. International stocks:15% MSCI EAFE. Portfolio with 25% in alternatives is as follows: U.S. stocks: 22.2% S&P 500, 8.8% Russell 2000; International Stocks: 4.4% MSCI EM, 13.2%MSCI EAFE; U.S. Bonds: 26.5% Barclays Capital Aggregate; Alternatives: 8.3% CS/Tremont Equity Market Neutral, 8.3% DJ/UBS Commodities, 8.3% NAREITEquity REIT Index. Return and standard deviation calculated using Morningstar Direct. Charts are shown for illustrative purposes only. Past returns are noguarantee of future results. Diversification does not guarantee investment returns and does not eliminate risk of loss. Data as of 12/31/11. LPL Financial Member FINRA/SIPC
  • 3. Theme- Based Investing A process to specifically meet your What is it? changing investment needs as your lifestyle and goals evolve.Allows you to focus onwhat is most important Why is it to you, investing in a way that fits your important? values and beliefs LPL Financial Member FINRA/SIPC
  • 4. Investment Themes Capital Appreciation Opportunistic Risk Aware Tax Conscious Socially Conscious Income Generation LPL Financial Member FINRA/SIPC
  • 5. Strategists to Help You Implement LPL Financial Research Quantitative AlphaSimplex Advantage Group Your advisor will help you choose the right strategist, or Advisor even multiple strategists, to Morningstar Investment BlackRock help you pursue your goals. Services J.P. Morgan Cougar Global Asset Investments ManagementLPL Financial is not affiliated with any company noted herein. LPL Financial Member FINRA/SIPC
  • 6. LPL Financial ResearchAvailable in All Investment Themes LPL Financial Member FINRA/SIPC
  • 7. LPL Financial Research LPL Financial Research has a sophisticated investment decision-making structure that seeks to: • Determine a current market outlook by performing a rigorous, multi-disciplined set of market analyses in combination with the judgment of accomplished industry veterans • Independently evaluate the broadest investment universe possible to uncover the most appropriate investments for portfolios • Build portfolios based on an understanding of which combination of factors works under which market scenarios to meet specified client- focused investment goals LPL Financial Member FINRA/SIPC
  • 8. LPL Financial Research Model Strategy ThemeDiversified Maximize return with Capital AppreciationDiversified Plus reasonable amounts of risk to promote growthAlpha Focused Maximize excess return, OpportunisticTactical Opportunities with a higher degree of riskAbsolute Return Conservatively structured to Risk AwareDownside Risk Aware protect principal in down markets or achieve steady return over all marketsTax Aware Increase capital without Tax Conscious causing significant tax consequencesSocially Responsible Pursue investment growth Socially ConsciousInvesting while promoting social goodIncome Focused Generate above average Income Generation income LPL Financial Member FINRA/SIPC
  • 9. AlphaSimplex GroupRisk Aware Portfolios LPL Financial Member FINRA/SIPC
  • 10. Alpha Simplex GroupAlphaSimplex Group specializes in risk-managed investment strategies. Thefirm was founded in 1999 by MIT professor Dr. Andrew Lo, a widelyrecognized authority on behavioral finance and alternative investing. HisAdaptive Markets Hypothesis states that the most successful strategies arethose that can adapt to changing market conditions.Their unique approach focuses on maximizing returns while managing risk.This is accomplished by decreasing portfolio exposures when marketsincrease in risk, or increasing portfolio exposures when market riskdecreases. LPL Financial Member FINRA/SIPC
  • 11. Alpha Simplex Group Model Strategy Theme Risk Efficient Explicitly constrain Growth volatility to 12% standard deviation Risk Efficient Explicitly constrain Moderate volatility to 9% Risk Aware standard deviation Risk Efficient Explicitly constrain Conservative volatility to 6% standard deviation Standard deviation: A historical measure of the variability of returns. If a portfolio has a high standard deviation, its returns have been volatile; a low standard deviation indicates returns have been less volatile. LPL Financial Member FINRA/SIPC
  • 12. BlackRockCapital Appreciation Strategies LPL Financial Member FINRA/SIPC
  • 13. BlackRock Creating a better financial future for investors Benefits of the world’s largest asset manager1 • Our portfolio managers enjoy unprecedented access: – To management of firms we invest in Scale – To new equity and fixed income issues • Global trading capabilities: source assets and negotiate favorable terms for our clients + Sharing our global information advantage • Presence on the ground in every major capital market around the world Insight • Each day, our investment professionals around the globe meet via video conference + Unparalleled commitment to risk management • Industry’s premier risk management platform • More than 800 professionals provide deep insight into risks and opportunities for portfolio managers Risk Management • Leading banks, insurance companies and sovereign nations rely on our technology to examine and understand the underlying risk of approximately $10 trillion in their own portfolios = Our Goal: Consistent long-term results with fewer Consistency surprises1. World’s largest asset manager by assets under management (AUM). AUM as of December 31, 2011 was $3.51 trillion. LPL Financial Member FINRA/SIPC 12
  • 14. The BlackRock Models Model Strategy Theme Globally diversified portfolio as aStrategic ETF Portfolio core holding for the more ‘risk conscious’ investor. Comprehensive and diversifiedTactical ETF Portfolio portfolio that seeks outperformance across sectors and regions using ETFs. Comprehensive, diversified portfolio of ETFs and mutual Capital Appreciation funds, which seeksAlpha/Beta Blend Portfolio outperformance across sectors. BlackRock sets asset allocations based on a combination of long and short-term market views. Comprehensive, diversified portfolios of primarily mutualTactical Mutual Fund Portfolio funds, which seeks outperformance within and across sectors and regions. LPL Financial Member FINRA/SIPC ‹#›
  • 15. Cougar Global InvestmentsRisk Aware Portfolios LPL Financial Member FINRA/SIPC
  • 16. Cougar Global InvestmentsCougar Global Investments is a tactical asset allocation Scenario Analysismanager with an emphasis on downside riskmanagement. They believe the goal of investing is togenerate compound growth that achieves client’sinvestment objectives. The primary means of achievingadequate compound growth is to avoid losing capital. Simulate Asset Class Returns and CorrelationsCougar Global Investments has developed a proprietaryinvestment process that constructs globally diversifiedportfolios and strives to participate in bull markets whileavoiding, if possible, the downside in bear markets. Construct Portfolios LPL Financial Member FINRA/SIPC
  • 17. Cougar Global Investments Model Strategy Theme MAR 6: The goals is to achieve a Minimum Acceptable Compound Return of 6% over time. Designed to allow 5% or less probability of negative returns MAR 8: The goals is to achieve a Minimum Acceptable Compound Return of 8%. Designed to allow 10% or less probability of negative returns MAR 10: The goal is to achieve a Minimum Acceptable Risk Aware Compound Return of 10 %. Designed to allow 15% or less probability of negative returns MAR 12: The goal is to achieve a Minimum Acceptable Compound Return of 12%. Designed to allow 20% or less probability of negative returns LPL Financial Member FINRA/SIPC Please note that returns are target returns and not guaranteed
  • 18. Innealta CapitalCapital AppreciationRisk AwareIncome Focused LPL Financial Member FINRA/SIPC
  • 19. Innealta CapitalInnealta’s focus is managing risk and Riskreducing portfolio volatility. They employ a • Risk metrics are used to capture the level ofWin by Not Losing approach to managing uncertainty in the marketsmulti-asset class portfolios. FundamentalThey are a quantitative asset management • Equity attractiveness; fundamental variablesfirm specializing in the active management of are used to measure relative value of each equity market versus bondsexchange-traded funds portfolios.Innealta is unique in its quantitative Economyinvestment strategy driven by a proprietary • The overall economy (includes monetary policy, the shape and level of term structureeconometric model, which was developed of interest rates, business cycleover many years of financial and econometric identification, personal consumption, credit spreads, and real interest rates)research by the company’s founder andChief Investment Officer, Gerald Buetow, TechnicalPhD, CFA. • Momentum/market conviction metrics are used to quantify the strength of market movements LPL Financial Member FINRA/SIPC
  • 20. Innealta Capital Model Strategy ThemeSector Rotation Tactically alters exposures among S&P 500 sectors and fixed income ETFs based on specific risk/reward characteristics of each Risk AwareCountry Rotation Tactically alters exposures among international countries and fixed income ETFs based on specific risk/reward characteristics of eachRisk-Based Conservative, Multi-asset class (40/60, 60/40Moderate or Growth or 80/20) portfolio with ability to Capital Appreciation overweight/underweight equities by 20%Fixed Income Aims to generate above average Income Focused yield with strict risk controls LPL Financial Member FINRA/SIPC
  • 21. J.P. Morgan Asset ManagementCapital AppreciationRisk AwareTax Conscious Models LPL Financial Member FINRA/SIPC
  • 22. J.P. Morgan Asset ManagementJ.P. Morgan Asset Management offers investment experience and insight thatfew other firms can match. Managed by the firm’s Global Asset ManagementGroup, they aim to provide high risk-adjusted returns over a market cycle. LPL Financial Member FINRA/SIPC
  • 23. J.P. Morgan Asset Management Model Strategy Theme Global Asset Allocation Highly diversified and dynamic asset Capital Appreciation allocation, with proprietary funds Global Asset Allocation Generate higher Diversified Absolute returns than cash with Return low volatility and limited Risk Aware risk with proprietary funds Global Asset Allocation Highly diversified and Tax Sensitive dynamic asset allocation, with Tax Conscious proprietary tax sensitive JP funds LPL Financial Member FINRA/SIPC
  • 24. Morningstar Investment ServicesCapital AppreciationRisk AwareTax Conscious Models LPL Financial Member FINRA/SIPC
  • 25. Morningstar Investment Services Morningstar Investment Services uses unbiased, objective mutual-fund and ETF research to build high-conviction model portfolios exclusively for fee-based independent advisors and the clients they serve. Their in-depth due diligence process is backed by the sophisticated analysis of Morningstar, Inc. Morningstar, Inc., offers investment management services through its registered investment advisor subsidiaries with more than $167 billion in assets under advisement or management as of Sept. 30, 2011. LPL Financial Member FINRA/SIPC
  • 26. Morningstar Investment Services Model Strategy Theme Managed Portfolios Diversified across broad range of asset Capital Appreciation classes, styles and managers Managed Portfolios Provide equity-like Absolute Return returns while providing downside protection in Risk Aware poor market environments Managed Portfolios May avoid asset Tax Sensitive classes that are not tax Tax Conscious efficient to earn tax- exempt income LPL Financial Member FINRA/SIPC
  • 27. Quantitative AdvantageCapital AppreciationOpportunisticRisk Aware Models LPL Financial Member FINRA/SIPC
  • 28. Quantitative Advantage The Opportunity in Style Rotation KEY: LG = S&P 500 Growth Index, MG = S&P MidCap 400 Growth Index, SG = S&P SmallCap 600 Growth Index, LV = S&P 500 Value Index, MV = S&P MidCap 400 Value Index, SV = S&P SmallCap 600 Value Index LPL Financial Member FINRA/SIPC Clients cannot invest directly in an index, so client results will vary. Past performance is no guarantee of future results.
  • 29. Quantitative Advantage Model Strategy ThemeGlobal Balanced 80/20, 60/40 A tailored blend of equity and Capital Appreciationand 40/60, Global Balanced fixed income positions seeking80/20, 60/40 and 40/60 with long-term growth of capitalEquity Flex with downside protectionGlobal Equity, Global Equity US & international equities Opportunisticwith Equity Flex seeking long-term growth of capitalInternational Equity, International equities seeking OpportunisticInternational Equity with Equity long-term growth of capitalFlexUS Equity, US Equity with US equities seeking long-term OpportunisticEquity Flex growth of capitalTactical All Market Multi-asset class design, Opportunistic including traditional and alternative asset classesTactical Bond Strategy Fixed income holdings, Risk Aware seeking higher than a risk-free LPL Financial Member FINRA/SIPC rate of return
  • 30. Theme Based Investing Investment Objective Your Management Style Financial Theme PrioritiesGAAM, Inc.mdavis@gilbert-aam.com InvestmentToll Free: 800-677-4445 PhilosophyTennessee Office: 423-247-8840Arizona Office: 480-366-5983 LPL Financial Member FINRA/SIPC
  • 31. Important Disclosures  The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult with your financial advisor. All indices are unmanaged and cannot be invested into directly.  Please contact your advisor for additional information on restrictions, fees, minimums, and other differences associated with the companies noted within this presentation. Please read the prospectus carefully to determine if the investment is right for you.  Investing in mutual funds involve risk, including possible loss of principal. Investments in specialized industry sectors have additional risks, which are outlined in the prospectus.  Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and are subject to availability and change in price.  International and emerging market investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.  Alternative strategies may not be suitable for all investors and should be considered as an investment for the risk capital portion of the investors portfolio. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.  An investment in Exchange Traded Funds (ETFs), structured as a mutual fund or unit investment trust, involves the risk of losing money and should be considered as part of an overall program, not a complete investment program. Investing in ETFs involves additional risks: not diversified, the risks of price volatility, competitive industry pressure, international political and economic developments, possible trading halts, and Index tracking error.  Stock investing involves risk including loss of principal. Investing in mutual funds involve risk, including possible loss of principal. Investments in specialized industry sectors have additional risks, which are outlined in the prospectus.  Correlation is a statistical measure of how two securities move in relation to each other. Correlations are used in advanced portfolio management. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not ensure against market risk. Asset allocation does not ensure a profit or protect against a loss. Not FDIC/NCUA Insured | Not Bank/Credit Union Guaranteed | May Lose Value | Not Guaranteed by any Government Agency Not a Bank/Credit Union Deposit | Securities and Advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC. LPL Financial Member FINRA/SIPCTracking # 1-050001, Expiration 3-13
  • 32. Important Disclosures  This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.  No strategy assures success or protects against loss.  This presentation was prepared by LPL Financial. All trademarks are the property of their respective owners.  For Model Wealth Portfolios (MWP) accounts, each strategist will provide the investment models to LPL Financial, which will have full discretion to invest MWP accounts in accordance with the models and to select other investments. LPL Financial may deviate from the models provided.  Index Disclosures: • The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. • The Russell 2000 Index is an unmanaged index generally representative of the 2,000 smallest companies in the Russell Index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index. • MSCI EAFE is made up of approximately 1,045 equity securities issued by companies located in 19 countries and listed on the stock exchanges of Europe, Australia, and the Far East. All values are expressed in U.S. dollars. All values are expressed in US dollars. Past performance is no guarantee of future results. • The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. As of May 2005 the MSCI Emerging Markets Index consisted of the following 26 emerging market country indices: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, Turkey and Venezuela. • This Barclays Aggregate Bond Index represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment-grade fixed rate bond market, with index components for government and corporate securities, mortgage pass- through securities, and asset-backed securities. • The NAREIT Equity REIT Index is an unmanaged index consisting of certain companies that own and operate income-producing real estate and have 75% or more of their respective gross invested assets in the equity or mortgage debt, respectively, of commercial properties. LPL Financial Member FINRA/SIPCTracking # 1-050001, Expiration 3-13
  • 33. Important Disclosures from Quantitative AdvantageThe information with respect to Quantitative Advantage, LLC (QA) included in this presentation has been prepared byQA, is for information purposes only and does not constitute investment advice and is subject to change without notice.There is no guarantee that QA’s investment philosophy, system and strategies will be successful or that the opinionsexpressed in the presentation will prove to be true.QA’s Global Tactical Strategies, like most investment strategies, involve the risk of loss. You should not assume thatQA’s future investment performance will be profitable or equal to past investment performance. QA’s investmentstrategies are implemented using exchange-traded funds (ETFs), which are subject to risks similar to those of otherpublicly-traded shares, including loss of principal, price volatility, competitive industry pressures, global political andeconomic developments, possible trading halts and index tracking error. An investment in ETFs should be consideredas part of an overall program, not a complete investment program. QA’s investment strategies involve a high level ofportfolio turnover, which may have negative tax consequences in taxable accounts.Although many ETFs are registered under the Investment Company Act like traditional mutual funds, some ETFs, inparticular those that invest in commodities and currencies, are not registered as investment companies under theInvestment Company Act. These types of ETFs may be formed as limited partnerships or grantor trusts and may haveunique tax consequences.The returns and return patterns of the indices shown in the chart on page 24 represent past performance, are not aguarantee of future performance and future returns and return patterns may vary from those shown in the chart.LPL Financial and QA are not affiliates of each other and make no representation with respect to each other.Upon request, QA will provide you with additional information about QA, including QA’s investment programs,strategies (including risks) and fees. Please review QA’s Form ADV Brochure carefully before you invest. LPL Financial Member FINRA/SIPC