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Asset Allocation and Diversification Strategies
Key Factors to Consider
April 18, 2016
Keel Point provides wealth advisory...
2
Important Disclosures
2
This presentation may contain forward-looking statements relating to anticipated future events, ...
3
Overview of Discussion
• Impact of Government & Dangers
• Global Condition and Outlook
• Asset Allocation & the Efficien...
4
5
Where are the Dangers?
• Disruption to US & Global Economic Growth
– US Election Campaigns
– Federal Reserve Tightening
...
6
Government Players
Source: CNN Politics 6
7
2016 Federal Budget: Spending
Source: JP Morgan Guide to the Markets. Data is as of February 29, 2016
8
Where is the Danger
Source: Bostonherald.com & img2-3.timeinc.net
8
9
Candidate & Protectionism
• “Bank has started calling / And the wolves are
at my door” Cost of Livin’ by Ronnie Dunn
• 2...
10
Where is the Danger
10
11
Who is in Charge?
Source: bing 11
12
QE Results
Source: IBES, Datastream, Bloomberg, JPMAM, January 2016; JP Morgan “Eye on the Market “ January 19, 2016
12
13Source: guprogressive.com
13
Where is the Danger
14
Where is the Danger
Source: hersfelder-zeitung.de
14
15
Global Economic Growth Fragile
2016 Estimates
• US: + 2.0%
• Euro area + 1.5%
• China: + 6.4%
• Japan: + 0.8%
• Brazil:...
16
Japan
Euro-Zone*
China
AustraliaIndiaBrazil
U.S.
-21.0%
Canada
U.K.
Russia
-18.1%
Hong Kong
Source: BB&T
Wealth; S&P; M...
17
Global Economic Growth – US
• Job Growth without inflation
• Consumer Spending
• Energy Prices: +/- $40
• Money Policy:...
18
GDP Recession in the US?
Not Likely
18
19
Global Economic Growth – Europe
• Recovery in progress?
• ECB Massive Stimulus & Rescue
• Banking Union => Fiscal Union...
20
Source: JP Morgan “Eye on the Market Outlook 2016”
Failing Euro
20
21
Understanding Risk – Volatility is the Norm
Source: Standard & Poor’s, Compustat, FactSet, J.P. Morgan Asset Management...
22
Time, Diversification
& the Volatility of Returns
Source: JP Morgan Guide to the Markets. Data is as of February 29, 20...
23
Annual Returns and Intra-Year Declines
Source: JP Morgan Guide to the Markets. Data is as of February 29, 2016
2424
Understanding Risk – Drivers of Behavior
Source: Liz Ann Sonders, Charles Schwab, “The Market’s Emotional Rollercoast...
2525
Understanding Risk – Returns Often Suffer
The indexes used are as follows: REITS: NAREIT Equity REIT Index, EAFE: MSC...
26
Distributions are based on S&P 500 Total monthly returns from January 1970 – December 2013 resulting in an annualized r...
2727
Potential Impact of Diversification
For illustrative purposes only to illustrate the possible impact of diversificati...
2828
Manager Selection Matters
We focus our efforts in identifying top-quartile managers in those asset classes where we b...
29
Implemented Through Select Managers
IMPORTANT INFORMATION REGARDING THE KEEL POINT HYPOTHETICAL PORTFOLIOS ABOVE
• The ...
30
10 Year Historical Returns of Various Portfolios
30
Hypothetical portfolios as of September 2015. The investment manage...
31
Investment Process
31
Personal Keel Point Strategic Views Tactical Views Enduring Portfolios
•Understand your
mission, ...
32
Portfolio Management Objectives
• Consistent Risk Expression Across Asset Classes
• Reduced Dispersion of Returns withi...
34
Simulated Risk/Return Analysis
Portfolio
MSCI All Country
World Index Barclays Aggregate
Return 8.3% 8.2% 6.6%
Volatili...
35
Risk-Return Equivalencies
Average
Return
Max
Drawdown
Risk
The information above illustrates the recommended portfolio’...
36
Simulated Return Quartiles
Annual
Negative
Returns
Annual
Positive
Returns
8.5% of
Observations
91.5% of
Observations
T...
37
Historical Analysis
Monthly Rolling 1 Year Performance
Upside/Downside Capture to the MSCI All Country World Index
The ...
38
Historical Analysis
Sharpe Ratio for Trailing Periods
Risk/Return Statistics for Trailing Periods
The information above...
39
Exposure to Equity Markets
39
Trendline Stats
MSCI ACWI Beta 38.3%
MSCI ACWI Alpha 5.0%
MSCI ACWI R2 74.9%
The informat...
40
Potential Benefits of Diversification
The information above illustrates the difference between a weighted average of th...
41
Risk Model: Factor Sensitivity
41
Beta
Return
Contribution
Volatility
Contribution
Equity Exposure
US Large Cap 28.33% ...
42
Keel Point Equity Sleeve Risk Stats
42
Statistic Equity Sleeve MSCI ACWI
Returns 9.04% 6.67%
Standard Deviation 13.96% ...
43
Keel Point Tactical Model Overview
43
Capital Market
Sectors
Relative Strength
Risk Adjusted
Return
Momentum
Consistent...
44
-10%
-5%
0%
5%
10%
15%
20%
25%
Keel Point Tactical vs Benchmark
44
With Tactical
Benchmark
With Keel Point
Tactical
Ret...
45
IMPORTANT INFORMATION
General
The disclosures provided in this presentation do not replace a comprehensive review of th...
46
IMPORTANT INFORMATION
FORM ADV / Brochure
Our FORM ADV and Brochure are available to you at no cost and should be revie...
47
IMPORTANT INFORMATION
Hypothetical Performance
Hypothetical performance is provided for informational purposes only to ...
48
IMPORTANT INFORMATION
Asset Class Benchmark Index
Equities MSCI ACWI Index
Public REITs FTSE NAREIT Equity REITs Index
...
49
IMPORTANT INFORMATION
Forward-Looking
Assumptions Historical Proxies
Asset Class/Manager Return Volatility Prior to Pro...
50
IMPORTANT INFORMATION
MSCI ACWI Index A free float-adjusted market capitalization weighted index that is designed to me...
51
Thank You
Keel Point
25 East Main Street, Suite 201
Chattanooga, TN 37408
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Keel Point
100 Church Street, Su...
ASSET ALLOCATION AND DIVERSIFICATION STRATEGIES:KEY FACTORS TO CONSIDER - Steven Skancke, KEEL POINT ADVISORS
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ASSET ALLOCATION AND DIVERSIFICATION STRATEGIES:KEY FACTORS TO CONSIDER - Steven Skancke, KEEL POINT ADVISORS

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Presentation delivered by Keynote Speaker Steven Skancke, Chief Investment Officer, KEEL POINT ADVISORS at the IFG Wealth Management Forum Spring 2016 held in Scottsdale AZ

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ASSET ALLOCATION AND DIVERSIFICATION STRATEGIES:KEY FACTORS TO CONSIDER - Steven Skancke, KEEL POINT ADVISORS

  1. 1. Asset Allocation and Diversification Strategies Key Factors to Consider April 18, 2016 Keel Point provides wealth advisory services to institutions and families. Securities offered through KPC, Member FINRA/SIPC. Investment Advisory services offered by Keel Point, an affiliate of KPC.
  2. 2. 2 Important Disclosures 2 This presentation may contain forward-looking statements relating to anticipated future events, results, circumstances, performance or expectations that are not historical facts but instead represent our beliefs regarding future events. By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that predictions and other forward-looking statements will not prove to be accurate. We caution readers of this document not to place undue reliance on our forward-looking statements as a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed or implied in the forward-looking statements. We caution that the foregoing list of factors is not exhaustive and that when relying on forward- looking statements to make decisions with respect to investing you should carefully consider these factors, as well as other uncertainties and potential events, and the inherent uncertainty of forward-looking statements. Due to the potential impact of these factors, Keel Point does not undertake, and specifically disclaims, any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law. Keel Point does not give tax, accounting, regulatory, or legal advice to its clients. The effectiveness of any of the strategies described will depend on your individual situation and on a number of complex factors. You should consult with your other advisors on the tax, accounting, and legal implications of these proposed strategies before any strategy is implemented. THE DISCLOSURES FOLLOWING THIS PRESENTATION ARE AN INTEGRAL PART OF ITS CONTENT AND SHOULD BE READ TOGETHER WITH THE INFORMATION PRESENTED.
  3. 3. 3 Overview of Discussion • Impact of Government & Dangers • Global Condition and Outlook • Asset Allocation & the Efficient Frontier • Risk Expression Across Asset Classes • Portfolio Simulation in Model & Custom • Traditional vs Alternative Asset Classes 3
  4. 4. 4
  5. 5. 5 Where are the Dangers? • Disruption to US & Global Economic Growth – US Election Campaigns – Federal Reserve Tightening – China Hard Landing – Geo-Political & Terrorist Events – Oil Prices Decline & Stay Low – Cyber Attack 5
  6. 6. 6 Government Players Source: CNN Politics 6
  7. 7. 7 2016 Federal Budget: Spending Source: JP Morgan Guide to the Markets. Data is as of February 29, 2016
  8. 8. 8 Where is the Danger Source: Bostonherald.com & img2-3.timeinc.net 8
  9. 9. 9 Candidate & Protectionism • “Bank has started calling / And the wolves are at my door” Cost of Livin’ by Ronnie Dunn • 20% of ‘99-’11factory job losses => China • Candidates Increasingly Protectionist • 1846 UK Corn Laws: poor farmers paid most • China Imports Increase Spending Power • Median Income would Lose 29% spending power • Lower Income would Lose 62% spending power 9
  10. 10. 10 Where is the Danger 10
  11. 11. 11 Who is in Charge? Source: bing 11
  12. 12. 12 QE Results Source: IBES, Datastream, Bloomberg, JPMAM, January 2016; JP Morgan “Eye on the Market “ January 19, 2016 12
  13. 13. 13Source: guprogressive.com 13 Where is the Danger
  14. 14. 14 Where is the Danger Source: hersfelder-zeitung.de 14
  15. 15. 15 Global Economic Growth Fragile 2016 Estimates • US: + 2.0% • Euro area + 1.5% • China: + 6.4% • Japan: + 0.8% • Brazil: - 3.2% • World Economy: + 3.2% 15 Source: The Economist and IMF
  16. 16. 16 Japan Euro-Zone* China AustraliaIndiaBrazil U.S. -21.0% Canada U.K. Russia -18.1% Hong Kong Source: BB&T Wealth; S&P; MSCI -6.2% -25.7% -9.9% -14.2% -22.8%-26.4%-40.0% *Eurozone comprised of 17 countries that use the Euro as its currency. Largest constituents include Germany, France and Italy. Mexico -17.3% Global Equity Market Returns • International equity markets over the past year experienced dramatic dispersion relative to U.S. stocks – with all major global markets trailing the U.S. by a wide margin. • Global markets continue to confront political unrest, commodity deflation, and a slowdown in emerging market growth expectations. Trailing 12 Months Ending 2/29/2016
  17. 17. 17 Global Economic Growth – US • Job Growth without inflation • Consumer Spending • Energy Prices: +/- $40 • Money Policy: Next – Rising Interest Rate? • U.S. $ Higher vs. Europe & Japan • Higher Imports & Lower Exports 17
  18. 18. 18 GDP Recession in the US? Not Likely 18
  19. 19. 19 Global Economic Growth – Europe • Recovery in progress? • ECB Massive Stimulus & Rescue • Banking Union => Fiscal Union? • Budget Deficits Shrinking • Greece Exit or UK Exit from EU 19
  20. 20. 20 Source: JP Morgan “Eye on the Market Outlook 2016” Failing Euro 20
  21. 21. 21 Understanding Risk – Volatility is the Norm Source: Standard & Poor’s, Compustat, FactSet, J.P. Morgan Asset Management. Dividend yield is calculated as the annualized dividend rate divided by price, as provided by Compustat. Forward Price to Earnings Ratio is a bottom-up calculation based on the most recent S&P 500 Index price, divided by consensus estimates for earnings in the next twelve months (NTM), and is provided by FactSet Market Aggregates. Returns are cumulative and based on S&P 500 Index price movement only, and do not include the reinvestment of dividends. Data are as of 3/31/2016. An index is an unmanaged weighted basket of securities generally representative of a certain market or asset class. An investment cannot be made directly in an index. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS AND OUTCOMES WILL VARY. Personal Keel Point Strategic Views Tactical Portfolios Enduring Portfolios
  22. 22. 22 Time, Diversification & the Volatility of Returns Source: JP Morgan Guide to the Markets. Data is as of February 29, 2016
  23. 23. 23 Annual Returns and Intra-Year Declines Source: JP Morgan Guide to the Markets. Data is as of February 29, 2016
  24. 24. 2424 Understanding Risk – Drivers of Behavior Source: Liz Ann Sonders, Charles Schwab, “The Market’s Emotional Rollercoaster” Personal Keel Point Strategic Views Tactical Portfolios Enduring Portfolios
  25. 25. 2525 Understanding Risk – Returns Often Suffer The indexes used are as follows: REITS: NAREIT Equity REIT Index, EAFE: MSCI EAFE, Oil: WTI Index, Bonds: Barclays Capital U.S. Aggregate Index, Homes: median sales price of existing single-family homes, Gold: USD/troy oz, Inflation: CPI. Average asset allocation investor return is based on an analysis by Dalbar, Inc. which utilizes the net of aggregate mutual fund sales, redemptions and exchanges each month as a measure of investor behavior. All returns are annualized (and total return where applicable), and represent the 20-year period ending 12/31/14 to match Dalbar’s most recent analysis. You cannot directly invest in an index. Data as of 6/30/2015 PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS AND OUTCOMES WILL VARY. (1995 - 2014) Personal Keel Point Strategic Views Tactical Portfolios Enduring Portfolios
  26. 26. 26 Distributions are based on S&P 500 Total monthly returns from January 1970 – December 2013 resulting in an annualized return of 10.4% and an annualized standard deviation of 15.5%. Expected returns represent a normal distribution of returns based on historical results. Data as per PerTrac databases. The outcome ranges may vary significantly and are provided for illustrative purposes only. The outcome ranges should not be construed as providing any assurance or guarantee as to future results. No conclusion should be drawn from any chart, graph or table that such illustration can, in and of itself, predict future results. 26 Understanding Risk – More than a Statistic … experience, however, has proven otherwise as we’ve seen three severe tail events in the last 40 years alone. Personal Keel Point Strategic Views Tactical Portfolios Enduring Portfolios Historical data implies that equity returns should be tightly clustered and losses are predictable…
  27. 27. 2727 Potential Impact of Diversification For illustrative purposes only to illustrate the possible impact of diversification. Returns are hypothetical and actual results will vary. These do not represent actual portfolios. Please see appendix for benchmark indices used to model specific asset classes. It is not possible to invest in the indices, the data shown does not reflect or compare features of an actual investment, such as its objectives, costs and expenses, liquidity, safety, guarantees or insurance, fluctuation of principal or return, or tax features. No conclusion should be drawn from any chart, graph or table that such illustration can, in and of itself, predict future results. Please see additional disclosure following this presentation. Hypothetical past performance is not indicative of future results. Personal Keel Point Tactical Portfolios Enduring PortfoliosStrategic Views Broadly Diversified Intermediate Intermediate With RE and MLPs Intermediate 60/40 Stocks/Bonds
  28. 28. 2828 Manager Selection Matters We focus our efforts in identifying top-quartile managers in those asset classes where we believe they can create the most positive impact on portfolio returns… Source: Data as per Cambridge Associates Manager Universe Statistics that utilizes five-year returns as of 12/30/2014. (2) Data as per 2014 Preqin Investor Network Global Alternatives Report that utilizes returns of 2009 vintage funds as of 9/30/14. The data does not adjust for survivorship bias or delayed reporting. PAST PERFORMANCE AND DISPERSION AMONG MANAGERS IS NOT INDICATIVE OF FUTURE RESULTS AND OUTCOMES WILL VARY. *Managers ranking in the top quartile can have a significant impact in a diversified portfolio. Personal Keel Point Tactical Portfolios Enduring PortfoliosStrategic Views
  29. 29. 29 Implemented Through Select Managers IMPORTANT INFORMATION REGARDING THE KEEL POINT HYPOTHETICAL PORTFOLIOS ABOVE • The hypothetical performance shown is as of 9/30/2015. The simulation does not represent portfolios that were in effect over the selected period. The actual portfolios would have changed over time. The information presented assumes that the portfolios are rebalanced quarterly, which is not typical. Results reflect reinvestment of capital gains, dividends and interest income during the periods. • The returns of the portfolios do not represent actual investments or transactions in the accounts of Keel Point clients. Because the portfolios were selected with the benefit of hindsight, the hypothetical returns shown may be higher or lower than the returns of a portfolio that would have actually been recommended during the time period shown. The actual returns of our clients over the period of the portfolio deviated, sometimes substantially, from the returns presented for the portfolios. Among the factors that cause the results to deviate from actual performance are: (1) the portfolios results do not reflect transaction costs or taxes, while an actual portfolio would have incurred these various costs; (2) the portfolios do not take into account the timing of trades, market conditions, liquidity constraints, cash balances, timing of client deposits and withdrawals and other factors that may have impacted any particular investment decision during the period; (3) Wherever manager performance is shorter than the reported time period, we have used in our judgment, a correlated index proxy to fill in the historical record. While index proxies may be highly correlated, they are never perfectly correlated to our managers and actual results will differ to the hypothetical performance shown. • For managers whose performance history does not extend through the full historical period, index proxies were used that we believe are appropriate substitutes. Please see the appendix for proxies used in each case. It is generally not possible to invest directly in an index, and indices do not reflect transaction expenses and other costs charged by the funds for which the indices are used as proxies. An actual investor may incur these costs and experience a lower return and an actual investment may have different volatility, returns and other investment characteristics than the index. • Hypothetical portfolios performance is based on data provided by Keel Point managers for the period covered by this analysis. Hypothetical portfolios are net of 1.25% of assumed Keel Point advisory fees and additional manager fees. Managers change from time to time based on manager performance and asset allocation. Please see additional disclosures at the end of this presentation. Personal Keel Point Tactical Portfolios Enduring PortfoliosStrategic Views
  30. 30. 30 10 Year Historical Returns of Various Portfolios 30 Hypothetical portfolios as of September 2015. The investment manager may change the portfolios over time. Annual expected returns are base on hypothetical average returns of economic asset classes for benchmark portfolios or managers for Keel Point portfolios derived from subjective assumptions and statistical models. There can be no assurance that the annual expected return can be achieved. Actual returns are likely to vary and may vary significantly at times. There can be no assurance that actual returns will fall within the ranges shown. All numbers reflect Keel Point strategic assumptions as of a certain date. Strategic long-term assumptions are subject to high levels of uncertainty regarding future economic and market factors that may affect future performance. These hypothetical portfolios represent indications of a broad range of possible returns. Hypothetical portfolios are net of Keel Point advisory fees and manager fees., benchmark Global Equities and 60/40 portfolios are gross of fees. Please see additional disclosures. Personal Keel Point Tactical Portfolios Enduring PortfoliosStrategic Views
  31. 31. 31 Investment Process 31 Personal Keel Point Strategic Views Tactical Views Enduring Portfolios •Understand your mission, vision, values and goals •Confirm your: ─ Objectives ─ Desired experience ─ Expectations •Global Perspective •Define expectations: ─ Return ─ Risk ─ Correlations •Alternative Investments •Macro-economics •Market scenario evaluations •Potential outcomes ─ Opportunities ─ Risks •Portfolio “Tuning” ─ Reflect changes in your life and outlook ─ Consider economic and market dynamics ─ Refine manager and strategy selections
  32. 32. 32 Portfolio Management Objectives • Consistent Risk Expression Across Asset Classes • Reduced Dispersion of Returns within Risk Categories • Maintain Portfolio Construction Flexibility • Consistent Performance Assessment • Consistent Assessment of Portfolio Components • Continue to Innovate New Strategies • Prepare Platform for Additional Growth 32
  33. 33. 34 Simulated Risk/Return Analysis Portfolio MSCI All Country World Index Barclays Aggregate Return 8.3% 8.2% 6.6% Volatility 6.1% 17.0% 4.1% % Negative 8.5% 33.2% 4.9% Average Negative -2.5% -9.9% -1.5% Max Drawdown -22.6% -54.4% -5.1% Sharpe (RF 2%) 1.03 0.36 1.13 The information above represents simulated results based upon the historical performance from 1990 to 2015 of the recommended investments and allocations, as well as index proxies chosen to estimate performance for those investments which do not have historical returns for the full historical period. The simulation results are provided for informational and discussion purposes only. While based on historical performance, simulated data does not represent actual historical performance. This information is intended to provide insight into the range of potential annual returns for the recommend portfolio. There is no certainty that any specific returns will be achieved. Please see additional disclosures for more details on the simulation. All returns are shown with an assumed 1% management fee. Hypothetical and past performance are not indicative of future results and outcomes will vary. 0% 2% 4% 6% 8% 10% 12% 14% -50% -30% -10% 10% 30% 50% 70% 90% %ofObservations Annual Return Portfolio MSCI All Country World Index Barclays Aggregate
  34. 34. 35 Risk-Return Equivalencies Average Return Max Drawdown Risk The information above illustrates the recommended portfolio’s modeled risk and return equivalents relative to a two asset benchmark portfolio containing the MSCI All Country World Index and the Barclays Aggregate Index (the “benchmarks”). Modeled performance of the recommended portfolio and the benchmarks is derived from the simulation data provided on slide 4 (see footnote description). Simulated performance does not represent actual historical performance. This information is intended to provide insight into the related benchmark characteristics of the recommend portfolio. There is no certainty that any specific returns will be achieved. Please see additional disclosures for more details on the simulation. All returns are shown with an assumed 1% management fee. Hypothetical and past performance are not indicative of future results and outcomes will vary. Volatility Risk MSCI All Country World Index, 101.0% MSCI All Country World Index, 39% Barclays Aggregate, 61% MSCI All Country World Index, 31.0% Barclays Aggregate, 69.0%
  35. 35. 36 Simulated Return Quartiles Annual Negative Returns Annual Positive Returns 8.5% of Observations 91.5% of Observations The information above details the recommended portfolio’s annual returns segmented into quartiles and is derived from the simulation data provided on slide 4 (see footnote description). Simulated performance does not represent actual historical performance. This information is intended to provide insight into the range of potential annual returns for the recommend portfolio. There is no certainty that any specific returns will be achieved. Please see additional disclosures for more details on the simulation. All returns are shown with an assumed 1% management fee. Hypothetical and past performance are not indicative of future results and outcomes will vary. -6.00% -5.00% -4.00% -3.00% -2.00% -1.00% 0.00% Avg. Worst 25% Returns Avg. Middle 50% Returns Avg. Best 25% Returns 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% Avg. Worst 25% Returns Avg. Middle 50% Returns Avg. Best 25% Returns
  36. 36. 37 Historical Analysis Monthly Rolling 1 Year Performance Upside/Downside Capture to the MSCI All Country World Index The information above is derived from historical investment returns and proxy index returns from 1990 to 2015. For those investments that do not have returns for the full historical period, proxy indices, which Keel Point believes are appropriate, are used to generate additional estimated investment returns. Proxy returns may differ significantly from actual investment returns. This information is intended to provide insight into the historical performance of the recommended portfolio and allocations without periodic position rebalancing and is provided for informational purposes only. Hypothetical performance does not represent the results of actual investing. In cases where structured notes have been recommended, the information presented assumes the recommended allocation is invested in the related underlying index.. All returns are shown with an assumed 1% management fee. Hypothetical and past performance is not indicative of future results and -60% -40% -20% 0% 20% 40% 60% 80% MSCI All Country World Index Negative Portfolio Returns Positive Portfolio Returns 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Upside Capture Downside Capture
  37. 37. 38 Historical Analysis Sharpe Ratio for Trailing Periods Risk/Return Statistics for Trailing Periods The information above is derived from historical investment returns and proxy index returns from 1990 to 2015. For those investments that do not have returns for the full historical period, proxy indices, which Keel Point believes are appropriate, are used to generate additional estimated investment returns. Proxy returns may differ significantly from actual investment returns. This information is intended to provide insight into the historical performance of the recommended portfolio and allocations without periodic position rebalancing and is provided for informational purposes only. Hypothetical performance does not represent the results of actual investing. In cases where structured notes have been recommended, the information presented assumes the recommended allocation is invested in the related underlying index.. All returns are shown with an assumed 1% management fee. Hypothetical and past performance is not indicative of future results and outcomes will vary. Portfolio MSCI All Country World Index Barclays Aggregate Return Volatility Sharpe Return Volatility Sharpe Return Volatility Sharpe Trailing 1 Year 3.4% 2.8% 0.50 1.3% 9.0% -0.08 1.9% 3.3% -0.04 Trailing 3 Year 7.1% 3.2% 1.59 13.7% 8.7% 1.34 1.8% 3.0% -0.06 Trailing 5 Year 7.1% 4.1% 1.25 12.6% 13.6% 0.78 3.3% 2.8% 0.48 Trailing 10 Year 6.0% 5.8% 0.70 7.1% 16.6% 0.31 4.4% 3.3% 0.74 **Note: All Sharpe Ratios are net of a 2% risk free rate -0.20 0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 Trailing 1 Year Trailing 3 Year Trailing 5 Year Trailing 10 Year Portfolio MSCI All Country World Index Barclays Aggregate
  38. 38. 39 Exposure to Equity Markets 39 Trendline Stats MSCI ACWI Beta 38.3% MSCI ACWI Alpha 5.0% MSCI ACWI R2 74.9% The information above is derived from historical investment returns and proxy index returns from 1990 to 2015. For those investments that do not have returns for the full historical period, proxy indices, which Keel Point believes are appropriate, are used to generate additional estimated investment returns. Proxy returns may differ significantly from actual investment returns. This information is intended to provide insight into the historical performance of the recommended portfolio and allocations relative to the MSCI All Country World Index without periodic position rebalancing and is provided for informational purposes only. Hypothetical performance does not represent the results of actual investing. In cases where structured notes have been recommended, the information presented assumes the recommended allocation is invested in the related underlying index. All returns are shown with an assumed 1% management fee. Hypothetical and past performance is not indicative of future results and outcomes will vary. -30% -20% -10% 0% 10% 20% 30% 40% -60% -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70% TTMReturnofPortfolio TTM Return of MSCI All Country World Index
  39. 39. 40 Potential Benefits of Diversification The information above illustrates the difference between a weighted average of the modeled volatility from each investment within the recommended portfolio (segmented by asset class) and total portfolio modeled volatility. This information is derived from the simulation data provided on slide 4 (see footnote description). Simulated performance does not represent actual historical performance. This information is intended to provide insight into the effectiveness of diversification in reducing portfolio risk (defined here as volatility) within the recommended portfolio. There is no certainty that future portfolio volatility will not significantly deviate from modeled volatility. Please see additional disclosures for more details on the simulation. Hypothetical and past performance are not indicative of future results and outcomes will vary. Notes: 1) Sum of Portfolio Asset Class Volatility is 7.1% 2) Modeled Portfolio Volatility is 6.1% 3) 3.0% Difference is the Risk Reduction Derived from Asset Correlations 1.1% 6.1% 0.9% 0.9% 3.1% 1.1% 3.0% 0.2% 1.3% 0.7% 2.3% 2.3% 2.3% 2.3% 2.3% 2.3% 1.5% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% US Large Cap US SMID Cap International Developed Emerging Markets Fixed Income Real Estate Alternatives Tactical Diversification Benefit Portfolio Volatility Volatility
  40. 40. 41 Risk Model: Factor Sensitivity 41 Beta Return Contribution Volatility Contribution Equity Exposure US Large Cap 28.33% 3.22% 4.53% US Small Cap 4.80% 0.56% 0.79% International Developed 2.85% 0.21% 0.40% Emerging Markets 4.45% 0.56% 0.75% Total Equity 4.55% 6.47% Fixed Income Exposure Duration 53.56% 3.05% -0.07% Credit 2.27% 0.05% 0.14% Yield Curve -4.26% -0.21% 0.05% Fixed Income 2.88% 0.12% Other Exposure Volatility -1.57% -0.07% 0.31% Other N/A -1.08% 0.34% Total High Vol Low Beta Alternatives -1.15 0.65% Total Portfolio 6.28% 7.24% Note: This information is from a hypothetical portfolio provided only for the purpose of highlighting portfolio simulation and risk expression across asset classes. Also, please see important disclosure information at the end of this presentation.
  41. 41. 42 Keel Point Equity Sleeve Risk Stats 42 Statistic Equity Sleeve MSCI ACWI Returns 9.04% 6.67% Standard Deviation 13.96% 15.41% Max Drawdown 47.93% 54.57% Average Drawdown 5.91% 7.30% MRM 6.44% 7.88% YTD 2.32% 0.71% 1 Year Return 3.33% 0.50% 3 Year Return 13.33% 10.50% 5 Year Return 11.09% 8.26% 10 Year Return 8.36% 6.22% Sharpe Ratio (Citi 3 Mo. T-Bill ) 0.43% 0.23% Skewness -0.74% -0.65% Kurtosis 1.60% 1.53% Monthly Returns from Jan 1990 to Oct 2015 displayed in US Dollar (USD) Note: This information is from a hypothetical portfolio provided only for the purpose of highlighting portfolio simulation and risk expression across asset classes. Also, please see important disclosure information at the end of this presentation.
  42. 42. 43 Keel Point Tactical Model Overview 43 Capital Market Sectors Relative Strength Risk Adjusted Return Momentum Consistent Alpha Best Capital Market Sectors Replace Low Risk Adjusted Return Sectors with Cash Tactical Model Allocations Volatility Model Return Filter / Macro Economic Assessment Sector Ranking44 ETF’s Across Global Equity, Fixed Income & Alternative Markets Run Weekly • Steve’s View • Tactical Model Output • Equity Market Technical Analysis • Yield Curve – Shape & Trend • Fear Gauges – VIX & HY Spreads • Leading Economic Indicators • Corporate Earning Growth • PMI Composites • Employment Data - payroll / wages / claims / JOLT’s • Other (China / inflation / commodities) Subjective Input Note: This information is from a hypothetical portfolio provided only for the purpose of highlighting portfolio simulation and risk expression across asset classes. Also, please see important disclosure information at the end of this presentation
  43. 43. 44 -10% -5% 0% 5% 10% 15% 20% 25% Keel Point Tactical vs Benchmark 44 With Tactical Benchmark With Keel Point Tactical Return 5.5% 9.1% Standard Deviation 4.9% 6.5% Average Drawdown -1.1% -1.4% Max Drawdown -6.8% -6.4% Sharpe Ratio 1.14 1.41 Historic Performance of Growth Portfolios as of 12/31/2015 Monthly Rolling 1 Year Performance of Growth Composites Growth Portfolio With Keel Point Tactical Sleeve Growth Portfolio with 40% in Tactical Benchmark Note: This information is from a hypothetical portfolio provided only for the purpose of highlighting portfolio simulation and risk expression across asset classes. Also, please see important disclosure information at the end of this presentation.
  44. 44. 45 IMPORTANT INFORMATION General The disclosures provided in this presentation do not replace a comprehensive review of the disclosures that can be found in a fund’s Prospectus, Private Placement Memorandum (“PPM”) or any other disclosures that may be made available to you for investments within the asset classes presented. Prior to making an investment, a client is required to review all offering materials including the PPM and related risk disclosures and must complete necessary subscription documents. Actual funds utilized in portfolios may vary from previously recommended funds or current funds presented. Keel Point’s view and investment vehicles may change at any time and without notice. No conclusion should be drawn from any chart, graph or table that such illustration can, in and of itself, predict future results. While reasonable efforts have been made to provide data from sources considered to be reliable, no guarantee of accuracy is given. No representation is made that any investor will, or is likely to, achieve results comparable to those shown or will make any profit at all or will be able to avoid incurring substantial losses. It is generally not possible to invest directly in an index, and indices presented do not reflect transaction expenses, management expenses and other costs that would be charged by the investment vehicles for which the indices are being compared. As an investment advisor, Keel Point does not provide tax, accounting, regulatory, or legal advice , however we partner with our client’s CPA’s and other professionals to provide the most comprehensive advice to the client. The effectiveness of any of the strategies described in this presentation will depend on your individual situation and on a number of complex factors. You should consult with your other advisors on the tax, accounting, and legal implications of any proposed strategies before the strategy is implemented. Conflicts of Interest There are conflicts of interest relating to certain hedge funds that Keel Point may utilize in client portfolios. A client should read and understand each of the disclosures made with regard to these conflicts before making a decision to invest. Likewise, a portion of a client’s portfolio may be allocated to structured notes under the Keel Point Structured Note Buying Program. Since Keel Point receives an additional fee under this program, a conflict exists in that Keel Point may have a bias towards notes within its program. The foregoing statements are not meant to be an exhaustive list of conflicts that may be present. For additional information regarding conflicts of interest please refer to Keel Point’s FORM ADV and Brochure, the Keel Point Structure Note Buying Program Brochure and all other disclosures made available to you. Forward Looking Statements This document may contain forward-looking statements relating to anticipated future events, results, circumstances, performance or expectations that are not historical facts but instead represent our beliefs regarding future events. By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that predictions and other forward-looking statements will not prove to be accurate. We caution readers of this document not to place undue reliance on our forward-looking statements as a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed or implied in the forward-looking statements. We caution that the foregoing list of factors is not exhaustive and that when relying on forward-looking statements to make decisions with respect to investing you should carefully consider these factors, as well as other uncertainties and potential events, and the inherent uncertainty of forward-looking statements. Due to the potential impact of these factors, Keel Point does not undertake, and specifically disclaims, any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law. Continued on the following page
  45. 45. 46 IMPORTANT INFORMATION FORM ADV / Brochure Our FORM ADV and Brochure are available to you at no cost and should be reviewed prior to entering into an advisory relationship. The FORM ADV and Brochure provide detailed information with regard to Keel Point, its management and conflicts of interest which may be present. Additional copies are available at the SEC Website http://www.adviserinfo.sec.gov/IAPD/Content/IapdMain/iapd_SiteMap.aspx or by contacting our Chief Compliance Officer at (703) 226-2145. No Solicitation This document is not a solicitation to invest in any investment product or offer any investment strategy. It is intended for information purposes only and should be used by sophisticated investors who are knowledgeable of the risks involved in making any investment. Alternative Investments Alternative investments involve specific risks that may be greater than those associated with traditional investments and may be offered only to clients who meet specific suitability requirements, including minimum net worth tests. You should consider the special risks with alternative investments including limited liquidity, tax considerations, incentive fee structures, potentially speculative investment strategies, and different regulatory and reporting requirements. You should only invest in hedge funds, managed futures or other similar strategies if you do not require a liquid investment and can bear the risk of substantial losses. There can be no assurance that any investment will meet its performance objectives or that substantial losses will be avoided. Structured Notes Structured Notes are complex investment vehicles and involve significant risks which are unique to their construction. Risk characteristics include: credit, liquidity and market risk. Note holders are unsecured creditors of the issuer and any return upon maturity is subject to an issuer’s ability to pay its obligations as they become due. This is not a complete list of the risks involved in structured notes and investors should read and understand the prospectus and offering documents for each note in which they invest. Although structured notes may provide some limited downside protection, a complete loss of principal is possible. Hedge Funds / Private Equity Investing in hedge funds and private equity involves substantial risks, and potential investors should clearly understand the risks involved. Investing in hedge funds is speculative, may not be suitable for all clients, and intended for experienced and sophisticated investors who are willing and able to bear the high economic risks of the investment, which can include: loss of all, or a substantial portion, of the investment due to leveraging, short-selling or other speculative investment practices; lack of liquidity in that there may be no secondary market for the fund and none expected to develop; volatility of returns; restrictions on transferring interests in the fund; absence of information regarding valuations and pricing; delays in tax reporting; less regulation and higher fees than mutual funds; and advisor risk. Continued on the following page
  46. 46. 47 IMPORTANT INFORMATION Hypothetical Performance Hypothetical performance is provided for informational purposes only to illustrate what performance might have been had the strategy been utilized without restrictions over the relevant period. Hypothetical performance does not represent the results of actual investing, but was achieved by means of retroactive application of a strategy designed with the benefit of hindsight. Hypothetical performance calculations have many inherent limitations, do not represent actual performance in actual accounts, and should not be interpreted as an indication of such performance. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between simulated performance results and actual results subsequently achieved by any particular investment program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight and, if the performance was actually being calculated and published during these periods, it might have been based on different criteria and a different methodology. Moreover, the market conditions that existed during prior periods will most likely not be repeated and this difference could adversely affect performance. There are numerous factors related to the markets in general or the implementation of any investment strategy, which cannot be fully accounted for in the preparation of simulated results. All of these factors can adversely affect actual performance results, including but not limited to market liquidity, general levels of interest rates and the effect on the relevant markets of political, economic or other external events. In addition, results may not reflect the impact that material economic and market factors might have had on the adviser’s decision-making while actually managing client assets. Further, hypothetical performance does not involve financial risk and no hypothetical record can completely account for the impact of financial risk in actual time. For example the ability to withstand losses or to adhere to a particular strategy in spite of losses are material points, which can adversely affect performance results. There are numerous other factors related to the markets in general or to the implementation of any specific investment strategy which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual investment results. THIS DOCUMENT IS INTENDED SOLELY FOR ILLUSTRATIVE PURPOSES FOR THE RECIPIENT TO WHOM KEEL POINT HAS PROVIDED IT AND SHOULD NOT BE REDISTRIBUTED OR REPRINTED WITHOUT THE PERMISSION OF KEEL POINT. NOTHING CONTAINED HEREIN SHOULD BE CONSIDERED TO BE AN OFFER TO BUY OR SELL ANY SECURITY OR ENGAGE IN ANY PARTICULAR INVESTMENT STRATEGY. THIS MATERIAL IS INTENDED ONLY FOR SOPHISTICATED INVESTORS WHO UNDERSTAND THE RISKS INVOLVED. HYPOTHETICAL AND PAST PERFORMANCE ARE NOT INDICATIVE OF FUTURE RESULTS AND OUTCOMES CAN VARY SIGNIFICANTLY.
  47. 47. 48 IMPORTANT INFORMATION Asset Class Benchmark Index Equities MSCI ACWI Index Public REITs FTSE NAREIT Equity REITs Index Master Limited Partnerships Alerian MLP Infrastructure Index Broad Fixed Income Barclays Aggregate Bond Index Hedge Funds Dow Jones Credit Suisse Hedge Fund Index Insurance Linked Swiss Re Cat Bond Index Private Equity Cambridge Associates PE Index Private Real Estate NCREIF-ODCE Index Benchmark Indices for Asset Class Modeling Please see additional disclosures. In constructing asset allocation models and presenting hypothetical historical returns by asset class, Keel Point used the below benchmark indices as representative of the corresponding asset classes.
  48. 48. 49 IMPORTANT INFORMATION Forward-Looking Assumptions Historical Proxies Asset Class/Manager Return Volatility Prior to Proxy US Large Cap ETF 9.0% 18.0% 9/30/2010 S&P 500 Index US Large Cap Dividend ETF 8.8% 17.0% 4/30/2006 S&P 500 Index US Small Cap ETF 9.7% 23.0% 9/30/2010 Russell 2000 Index International Developed Mkts ETF 7.2% 18.0% 7/31/2007 MSCI EAFE Index Public Emerging Markets Fund 1 9.7% 16.0% NA Public Emerging Markets Fund 2 11.4% 23.0% NA Public Emerging Markets Fund 3 11.4% 23.0% 9/30/2008 MSCI EM Index Public Alternative Equity Fund 8.0% 12.0% 8/31/2007 S&P 500 Index REIT ETF 8.6% 18.0% 9/30/2004 FTSE NAREIT Equity REITs Index Private MLP Fund 12.0% 15.0% 1/31/2011 Alerian MLP Index Public MLP Fund 8.3% 13.0% 4/30/2010 Alerian MLP Index Public Short Duration Fixed Income Fund 2.0% 3.5% NA Public Floating Rate Fixed Income Fund 3.5% 5.5% NA Public Credit Fund 2.8% 3.8% 10/31/2008 Barclays Aggregate Bond Index Public Multi-Strat Alternative Fund 7.0% 8.0% 7/31/2011 Barclays Aggregate Bond Index Private Multi-Strat Hedge Fund* 10.5% 6.0% 6/30/2008 Dow Jones Credit Suisse Hedge Fund Index Public Reinsurance Fund 7.0% 4.0% 3/29/2013 Swiss Re Cat Bond Index Public HY Reinsurance Fund 8.0% 5.0% 3/31/2013 Swiss Re Cat Bond Index Public Reinsurance Interval Fund 10.0% 7.0% 1/31/2014 Swiss Re Cat Bond Index Private Equity 14.3% 15.0% All Periods Cambridge Associates PE Index Private Real Estate 10.3% 12.0% All Periods NCREIF-ODCE Index Forward Looking Manager Assumptions and Historical Proxies Returns shown above are gross of Keel Point fees which are netted out upon the construction of the hypothetical portfolios. There can be no assurance that these returns can be achieved. Actual returns are likely to vary. Please see additional disclosures. All numbers reflect Keel Point assumptions as of a certain date and are subject to change without notice. Assumptions are subject to high levels of uncertainty regarding future economic and market factors that may affect future performance. They are hypothetical indications of a broad range of possible returns. Forward looking assumptions as of June 2014. *The Private Multi-Strat Hedge Fund is a recently formed access vehicle; performance from 6/30/2008 reflects the performance of the eight current underlying managers in the access vehicle at the assumed allocation levels of July 1, 2014 net of access fund fees of 1.5% per annum.
  49. 49. 50 IMPORTANT INFORMATION MSCI ACWI Index A free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. Consists of 44 country indices comprising 23 developed and 21 emerging market country indices. S&P 500 Index An index of 500 stocks chosen for market size, liquidity and industry grouping, among other factors. The S&P 500 is designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe. Russell 2000 index An index measuring the performance approximately 2,000 small-cap companies in the Russell 3000 Index, which is made up of 3,000 of the biggest U.S. stocks. The Russell 2000 serves as a benchmark for small-cap stocks in the United States. MSCI EAFE Index A stock market index that is designed to measure the equity market performance of developed markets outside of the U.S. & Canada maintained by MSCI Barra. The index includes a selection of stocks from 21 developed markets excluding the U.S. and Canada. MSCI EM Index A stock market index that captures large and mid cap representation across 23 Emerging Markets countries. With 823 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country. FTSE NAREIT Equity REITs Index The FTSE NAREIT Equity REITs index contains all US Equity REITs not designated as Timber REITs or Infrastructure REITs. Alerian MLP Infrastructure Index The Alerian MLP Infrastructure Index is a composite of energy infrastructure Master Limited Partnerships (MLPs). The capped, float-adjusted, capitalization-weighted index, whose constituents earn the majority of their cash flow from the transportation, storage, and processing of energy commodities, is disseminated real-time. Barclays Aggregate Bond Index The Barclays Capital Aggregate Bond Index is a broad base index, maintained by Barclays Capital and is often used to represent investment grade bonds being traded in United States. Dow Jones Credit Suisse Hedge Fund Index An asset-weighted hedge fund index derived from the TASS database of more than 5,000 funds. The index consists of funds with a minimum of US $10 million under management and a current audited financial statement. Includes all hedge fund categories. Swiss Re Cat Bond Index The Swiss Re Cat Bond Index tracks the total rate of return for all outstanding USD denominated catastrophe bonds. Cambridge Associates PE Index An end-to-end calculation based on data compiled from 1,096 U.S. private equity funds (buyout, growth equity, private equity energy and mezzanine funds), including fully liquidated partnerships, formed between 1986 and 2013. NCREIF ODCE Index An index of investment returns reporting on both a historical and current basis the results of 33 open-end commingled funds pursuing a core investment strategy, some of which have performance histories dating back to the 1970s. MSCI EAFE A stock market index that is designed to measure the equity market performance of developed markets outside of the U.S. & Canada maintained by MSCI Barra. The index includes a selection of stocks from 21 developed markets excluding the U.S. and Canada. Index Definitions
  50. 50. 51 Thank You Keel Point 25 East Main Street, Suite 201 Chattanooga, TN 37408 423-756-4800 Keel Point 100 Church Street, Suite 500 Huntsville, AL 35801 256-704-5111 Keel Point 4000 West 114th Street, Suite 190 Leawood, KS 66211 913-663-1800 Keel Point 8065 Leesburg Pike, Suite 300 Vienna, VA 22182 703-807-2020 www.keelpoint.com

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