S1800.2                                              Client PresentationThe returns and other characteristics of the alloc...
S1810.3Principles      • Markets work. Capital markets do a good job of fairly pricing all available        information an...
S1820.1Basic 60/40 Balanced Strategy vs. Company PlansResults of 192 Corporate Pension FundsAnnual: 1988–2005             ...
S1830.6The Basic Institutional PortfolioQuarterly: 1973–2010Model Portfolio 1                                  Annualized ...
S1840.7Evaluating the Maturity Risk/Return TradeoffQuarterly: 1964–2010                                                   ...
S1850.6Substituting Short-Term for Long-Term Fixed IncomeQuarterly: 1973–2010Model Portfolio 2                            ...
S1860.6History of the Size Effect                                                                                         ...
S1870.7Diversifying a Portfolio into US Small Cap StocksQuarterly: 1973–2010Model Portfolio 3                             ...
S1890.6Size and Value Effects in the USAnnual: 1927–2010                                             US Large             ...
S1900.9Diversifying a Portfolio into US Value StocksQuarterly: 1973–2010Model Portfolio 4                                 ...
S1910.6Size and Value Effects AbroadAnnual: 1975–2010                                                                     ...
S1920.7A Fully Diversified PortfolioQuarterly: 1973-2010Model Portfolio 5                                Annualized       ...
S2000.5MSCI DisclosureCopyright MSCI 2011. Unpublished. All rights reserved. This information may only be used for your in...
Upcoming SlideShare
Loading in …5
×

Renaissance Wealth Counsel website client presentation

394 views

Published on

Published in: Economy & Finance, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
394
On SlideShare
0
From Embeds
0
Number of Embeds
13
Actions
Shares
0
Downloads
2
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Renaissance Wealth Counsel website client presentation

  1. 1. S1800.2 Client PresentationThe returns and other characteristics of the allocation mixes contained in this presentation are based on model/back-tested simulations to demonstrate broad economicprinciples. They were achieved with the benefit of hindsight and do not represent actual investment performance. There are limitations inherent in model performance; it doesnot reflect trading in actual accounts and may not reflect the impact that economic and market factors may have had on an advisor’s decision making if the advisor weremanaging actual client money. Model performance is hypothetical and is for illustrative purposes only. Model performance shown includes reinvestment of dividends andother earnings but does not reflect the deduction of investment advisory fees or other expenses. Clients’ investment returns would be reduced by the advisory fees and otherexpenses they would incur in the management of their accounts.Past performance is not a guarantee of future results, and there is always the risk that an investor may lose money. Indexes are not available for direct investment. Theirperformance does not reflect the expenses associated with the management of an actual portfolio.
  2. 2. S1810.3Principles • Markets work. Capital markets do a good job of fairly pricing all available information and investor expectations about publicly traded securities. • Diversification is key. Comprehensive, global asset allocation can neutralize the risks specific to individual securities. • Risk and return are related. The compensation for taking on increased levels of risk is the potential to earn greater returns. • Portfolio structure explains performance. The asset classes that comprise a portfolio and the risk levels of those asset classes are responsible for most of the variability of portfolio returns.
  3. 3. S1820.1Basic 60/40 Balanced Strategy vs. Company PlansResults of 192 Corporate Pension FundsAnnual: 1988–2005 16 Companies (in alphabetical order) 14 Annual Average Returns (%) Anheuser-Busch Cos., Inc. 12 Avista Corp. Cooper Industries, Inc. 10 Delta Air Lines, Inc. Edison International FirstEnergy Corp. 8 Goodyear Tire & Rubber Co. Ingersoll-Rand Co. Ltd. 6 IBM Corporation Jefferson-Pilot Corp. 4 Lincoln National Corp. Sherwin-Williams Co. 2 Sunoco, Inc. SunTrust Banks, Inc. 0 UAL Corp. Union Pacific Corp. Company 110 Company 120 Company 130 Company 140 Company 150 Company 160 Company 170 Company 180 Company 190 Company 192 Company 100 Basic 60/40 Company 1 Company 60 Company 70 Company 80 Company 90 Company 10 Company 20 Company 30 Company 40 Company 50 Verizon Communications, Inc. VF Corp. West Pharmaceutical Svcs., Inc. Williams Cos., Inc. Wolverine World Wide, Inc.Basic 60/40 is 60% S&P 500 Index, 40% Lehman Brothers US Government/Credit Bond Index Intermediate, rebalanced monthly.Source: FutureMetrics (December 2006); all companies with fiscal year ending December, with complete return data from 1988–2005.The S&P data are provided by Standard & Poor’s Index Services Group. Barclays Capital data provided by Barclays Bank PLC.
  4. 4. S1830.6The Basic Institutional PortfolioQuarterly: 1973–2010Model Portfolio 1 Annualized Annualized S&P 500 Index Compound Standard Barclays US Government/Credit Bond Index Return Deviation Model Portfolio 1 9.47% 11.16% Barclays US Govt./Credit S&P 500 Bond Index Index Model Portfolio 1 40% 60%Barclays Capital data provided by Barclays Bank PLC. The S&P data are provided by Standard & Poor’s Index Services Group.Indexes are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio.Past performance is not a guarantee of future results. Not to be construed as investment advice. Returns of model portfolios are based on back-tested modelallocation mixes designed with the benefit of hindsight and do not represent actual investment performance. See cover page for additional information.
  5. 5. S1840.7Evaluating the Maturity Risk/Return TradeoffQuarterly: 1964–2010 12• Not all investors define risk as standard deviation. Some 10 investors may seek to hedge long-term liabilities using long- 8 term bonds. Annualized Compound Returns 6• Historically, longer-maturity instruments have higher standard deviations than 4 shorter-maturity instruments. Annualized Standard Deviation 2 0 One-Month Six-Month One-Year Five-Year Twenty-Year US Treasury US Treasury US Treasury US Treasury US Govt. Maturity Bills Bills Notes Notes Bonds Annualized Compound Return (%) 5.45 6.20 6.41 7.27 7.37 Annualized Standard Deviation (%) 1.42 1.77 2.34 6.21 11.29Source: One-Month US Treasury Bills, Five-Year US Treasury Notes, and Twenty-Year (Long-Term) US Government Bonds provided by Ibbotson Associates. Six-Month USTreasury Bills provided by CRSP (1964–1977) and BofA Merrill Lynch (1978–present). One-Year US Treasury Notes provided by CRSP (1964–May 1991) and BofA MerrillLynch (June 1991–present). Ibbotson data © Stocks, Bonds, Bills, and Inflation Yearbook™, Ibbotson Associates, Chicago (annually updated work by Roger G. Ibbotson andRex A. Sinquefield). CRSP data provided by the Center for Research in Security Prices, University of Chicago. The Merrill Lynch Indices are used with permission; copyright2011 Merrill Lynch, Pierce, Fenner & Smith Incorporated; all rights reserved.Indexes are not available for direct investment. Index performance does not reflect expenses associated with the management of an actual portfolio.Past performance is not a guarantee of future results. Values change frequently and past performance may not be repeated. There is always the risk that an investor maylose money. Fixed income securities are subject to interest rate risk because the prices of fixed income securities tend to move in the opposite direction of interest rates. Ingeneral, fixed income securities with longer maturities are more sensitive to these price changes and may experience greater fluctuation in returns.
  6. 6. S1850.6Substituting Short-Term for Long-Term Fixed IncomeQuarterly: 1973–2010Model Portfolio 2 S&P 500 Index Annualized Annualized Compound Standard BofA Merrill Lynch One-Year US Treasury Note Index Return Deviation Model Portfolio 1 9.47% 11.16% Model Portfolio 2 8.83% 10.23% BofA Merrill Lynch Barclays US One-Year US Govt./Credit S&P 500 Treasury Note Bond Index Index Index Model Portfolio 1 40% 60% Model Portfolio 2 60% 40%Barclays Capital data provided by Barclays Bank PLC. The S&P data are provided by Standard & Poor’s Index Services Group. The Merrill Lynch Indices are used withpermission; copyright 2011 Merrill Lynch, Pierce, Fenner & Smith Incorporated; all rights reserved.Indexes are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio.Past performance is not a guarantee of future results. Not to be construed as investment advice. Returns of model portfolios are based on back-tested model allocation mixesdesigned with the benefit of hindsight and so not represent actual investment performance. See cover page for additional information.
  7. 7. S1860.6History of the Size Effect 1965–1968 1969–1974 Total Returns (%) 350 0• The size effect can persist for long periods in either direction. 0 -75 1 S&P 2 3 4 5 6 7 8 9 10 1 S&P 2 3 4 5 6 7 8 9 10• These long periods Market Cap Decile Largest Smallest Largest Smallest can immediately be succeeded by a reversal in the opposite 1975–1983 1984–1990 Total Returns (%) 1,400 175 direction. 0 -25 1 S&P 2 3 4 5 6 7 8 9 10 1 S&P 2 3 4 5 6 7 8 9 10 Market Cap Decile Largest Smallest Largest Smallest Total Returns (%) Market Cap Decile Largest SmallestThe S&P data are provided by Standard & Poor’s Index Services Group.Market cap decile data provided by the Center for Research in Security Prices, University of Chicago.Indexes are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio.
  8. 8. S1870.7Diversifying a Portfolio into US Small Cap StocksQuarterly: 1973–2010Model Portfolio 3 Annualized Annualized BofA Merrill Lynch One-Year US Treasury Note Index Compound Standard S&P 500 Index Return Deviation US Small Cap Index Model Portfolio 1 9.47% 11.16% Model Portfolio 2 8.83% 10.23% Model Portfolio 3 9.74% 11.88% BofA Merrill Lynch Barclays US One-Year US US Small Govt./Credit S&P 500 Treasury Note Cap Bond Index Index Index Index Model Portfolio 1 40% 60% Model Portfolio 2 60% 40% Model Portfolio 3 30% 40% 30%Barclays Capital data provided by Barclays Bank PLC. The S&P data are provided by Standard & Poor’s Index Services Group. The Merrill Lynch Indices are used withpermission; copyright 2011 Merrill Lynch, Pierce, Fenner & Smith Incorporated; all rights reserved. Dimensional Index data compiled by Dimensional. Indexes are not availablefor direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of futureresults. Not to be construed as investment advice. Returns of model portfolios are based on back-tested model allocation mixes designed with the benefit of hindsight and donot represent actual investment performance. See cover page for additional information.
  9. 9. S1890.6Size and Value Effects in the USAnnual: 1927–2010 US Large US Small Capitalization Stocks Capitalization Stocks 13.82 11.69 10.45 9.85 9.05 8.97 Annualized Compound Returns (%) Fama/French Fama/French Fama/French Fama/French US Large S&P 500 US Large US Small CRSP 6-10 US Small Value Index Index Growth Index Value Index Index Growth Index Average Return (%) 14.03 11.88 11.35 19.17 15.98 13.95 Standard Deviation (%) 27.01 20.51 21.93 35.13 30.94 34.05Fama/French data provided by Fama/French. The S&P data are provided by Standard & Poor’s Index Services Group. CRSP data provided bythe Center for Research in Security Prices, University of Chicago.Small company risk: Securities of small firms are often less liquid than those of large companies. As a result, small company stocks mayfluctuate relatively more in price. Indexes are not available for direct investment. Their performance does not reflect the expenses associatedwith the management of an actual portfolio. Past performance is not a guarantee of future results. Not to be construed as investment advice. Seecover page for additional information.
  10. 10. S1900.9Diversifying a Portfolio into US Value StocksQuarterly: 1973–2010Model Portfolio 4 Annualized Annualized Merrill Lynch One-Year US Treasury Note Index Compound Standard S&P 500 Index Return Deviation US Small Cap Index Model Portfolio 1 9.47% 11.16% US Large Value Index Model Portfolio 2 8.83% 10.23% Targeted Value Index Model Portfolio 3 9.74% 11.88% Model Portfolio 4 10.68% 11.81% Barclays US BofA Merrill Govt./Credit Lynch One-Year US Small US Large Targeted Bond S&P 500 US Treasury Cap Value Value Index Index Note Index Index Index Index Model Portfolio 1 40% 60% Model Portfolio 2 60% 40% Model Portfolio 3 30% 40% 30% Model Portfolio 4 15% 40% 15% 15% 15%Barclays Capital data, formerly Lehman Brothers, provided by Barclays Bank PLC. The S&P data are provided by Standard & Poor’s Index Services Group. TheMerrill Lynch Indices are used with permission; copyright 2011 Merrill Lynch, Pierce, Fenner & Smith Incorporated; all rights reserved. Dimensional Index datacompiled by Dimensional.Indexes are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio.Past performance is not a guarantee of future results. Not to be construed as investment advice. Returns of model portfolios are based on back-tested modelallocation mixes designed with the benefit of hindsight and do not represent actual investment performance. See cover page for additional information.
  11. 11. S1910.6Size and Value Effects AbroadAnnual: 1975–2010 Non-US Developed Markets Stocks 15.79 15.72 10.57 Annualized Compound Return (%) Fama/French International International Small Cap MSCI World Value Index Index ex USA Index Average Annual Return (%) 18.48 19.17 12.74 Standard Deviation (%) 24.56 28.13 21.47 Annual Correlation 0.596 0.505 0.651 Coefficient to S&P 500 IndexFama/French data provided by Fama/French from Bloomberg and MSCI securities data. International Small Cap Index data compiled by Dimensional fromBloomberg, Style Research, London Business School, and Nomura Securities data. MSCI data copyright MSCI 2011, all rights reserved; see MSCIdisclosure page for additional information. The S&P data are provided by Standard & Poor’s Index Services Group.Indexes are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio.Past performance is not a guarantee of future results. Not to be construed as investment advice.
  12. 12. S1920.7A Fully Diversified PortfolioQuarterly: 1973-2010Model Portfolio 5 Annualized Annualized Merrill Lynch One-Year US Treasury Note Index Compound Standard S&P 500 Index Return Deviation US Small Cap Index Model Portfolio 1 9.47% 11.16% US Large Value Index Model Portfolio 2 8.83% 10.23% Targeted Value Index Model Portfolio 3 9.74% 11.88% International Large Index International Small Index Model Portfolio 4 10.68% 11.81% International Large Value Index Model Portfolio 5 11.65% 11.26% International Small Value Index Emerging Markets Blended Index BofA Barclays US Merrill Lynch US US Intl. Intl. Emerging Govt./Credit S&P One-Year US Small Large Targeted Intl. Intl. Large Small Markets Bond 500 Treasury Cap Value Value Large Small Value Value Blended Index Index Note Index Index Index Index Index Index Index Index Index Model Portfolio 1 40% 60% Model Portfolio 2 60% 40% Model Portfolio 3 30% 40% 30% Model Portfolio 4 15% 40% 15% 15% 15% Model Portfolio 5 7.5% 40% 7.5% 7.5% 7.5% 6% 6% 6% 6% 6%Rebalanced annually. Barclays Capital data provided by Barclays Bank PLC. The S&P data are provided by Standard & Poor’s Index Services Group. The Merrill LynchIndices are used with permission; copyright 2011 Merrill Lynch, Pierce, Fenner & Smith Incorporated; all rights reserved. Dimensional Index data compiled by Dimensional.Emerging Markets Blended Index consists of 50% Fama/French Emerging Markets Index, 25% Fama/French Emerging Markets Small Cap Index, and 25% Fama/FrenchEmerging Markets Value Index. Fama/French Emerging Markets, Fama/French Emerging Markets Value and Fama/French Emerging Markets Small Cap Index weightingsallocated evenly between Dimensional International Small Cap Index and Fama/French International Value Index prior to January 1989 data inception. DimensionalInternational Small Cap Value Index weighting allocated to International Small Cap Index prior to July 1981 data inception. International Value weighting allocated evenlybetween International Small Cap and MSCI World ex USA Index prior to January 1975 data inception. Indexes are not available for direct investment. Their performancedoes not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results. Not to be construed asinvestment advice. Returns of model portfolios are based on back-tested model allocation mixes designed with the benefit of hindsight and do not represent actualinvestment performance. See cover page for additional information.
  13. 13. S2000.5MSCI DisclosureCopyright MSCI 2011. Unpublished. All rights reserved. This information may only be used for your internaluse, may not be reproduced or redisseminated in any form and may not be used to create any financialinstruments or products or any indices. This information is provided on an “as is” basis and the user of thisinformation assumes the entire risk of any use it may make or permit to be made of this information. NeitherMSCI, any of its affiliates, nor any other person involved in or related to compiling, computing or creating thisinformation makes any express or implied warranties or representations with respect to such information or theresults to be obtained by the use thereof, and MSCI, its affiliates, and each such other person herebyexpressly disclaims all warranties (including, without limitation, all warranties of originality, accuracy,completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respectto this information. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any otherperson involved in or related to compiling, computing, or creating this information have any liability for anydirect, indirect, special, incidental, punitive, consequential, or any other damages (including, without limitation,lost profits) even if notified of, or if it might otherwise have anticipated, the possibility of such damages.

×