<ul><li>Global Balanced Portfolio </li></ul>
Investment Philosophy & Strategy <ul><ul><li>Asset Allocation is the primary driver of portfolio performance, and signific...
Four Basic States of an Economy RECOVERY (2) REFLATION (1) OVERHEAT (3) Source: Merrill Lynch Research.  The Investment Cl...
Four Classes of Portfolio Assets <ul><li>Growth Assets: </li></ul><ul><li>Stocks </li></ul><ul><li>Hedge Funds </li></ul><...
Portfolio Asset Allocation: Tactical Changes over Market Cycles Sample Client Portfolio Allocation Asset Class Description...
Sample Global Balanced Portfolio Asset Class Description Weight Income (35%) Loomis Sayles Bond Lord Abbett Dev Local Mark...
Portfolio Process <ul><ul><li>Evaluate phase of economic cycle (Reflation, Recovery, Overheat, Stagflation) based upon: </...
Summary of Recent Portfolio Actions <ul><ul><li>January:  Added Convertibles, Increased Corporate Credit, Trimmed Equity &...
The Private Banking and Investment Group is a division of Merrill Lynch that offers a broad array of personalized wealth m...
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Pia investment clock etf porfolio

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  • Pia investment clock etf porfolio

    1. 1. <ul><li>Global Balanced Portfolio </li></ul>
    2. 2. Investment Philosophy & Strategy <ul><ul><li>Asset Allocation is the primary driver of portfolio performance, and significant value can be added by tactically allocating assets between: </li></ul></ul><ul><ul><ul><li>Growth (assets that are sensitive to movement in GDP) </li></ul></ul></ul><ul><ul><ul><li>Income (assets that are sensitive to interest rates) </li></ul></ul></ul><ul><ul><ul><li>Real Assets (assets that are sensitive to inflation) </li></ul></ul></ul><ul><ul><ul><li>Safety (assets that are sensitive to none of the above) </li></ul></ul></ul><ul><ul><li>The “Investment Clock” & Economic Cycle informs our Tactical Asset Allocation decisions: </li></ul></ul><ul><ul><ul><li>Growth vs. Income vs. Real Assets vs. Safety </li></ul></ul></ul><ul><ul><ul><li>US vs. International vs. Emerging Markets </li></ul></ul></ul><ul><ul><ul><li>Growth vs. Value </li></ul></ul></ul><ul><ul><ul><li>Large Cap vs. Small Cap </li></ul></ul></ul><ul><ul><ul><li>Sectors </li></ul></ul></ul><ul><ul><li>Implemented with: </li></ul></ul><ul><ul><ul><li>Low cost Exchange Traded Funds (ETFs), or </li></ul></ul></ul><ul><ul><ul><li>institutional shares of actively managed mutual funds with demonstrated manager skill </li></ul></ul></ul>
    3. 3. Four Basic States of an Economy RECOVERY (2) REFLATION (1) OVERHEAT (3) Source: Merrill Lynch Research. The Investment Clock, Special Report dated Nov 10, 2004 : Making Money from Macro Inflation climbs, productive capacity becomes limited. Productivity growth eases off, but GDP remains buoyant. Yield curves flatten and shift higher. STAGFLATION (4) Economic growth gathers momentum on the easing of central bank monetary policy. However inflation continues to fall and productivity moves up sharply. GDP growth falls but inflation continues to rise. Corporate earnings fall sharply. Central bank policy is fighting inflation GDP Growth is weak and inflation falls as a result of declining commodity prices and unused capacity. Two Fundamental Macroeconomic Variables – Real Economic Growth & Inflation
    4. 4. Four Classes of Portfolio Assets <ul><li>Growth Assets: </li></ul><ul><li>Stocks </li></ul><ul><li>Hedge Funds </li></ul><ul><li>Real Assets: </li></ul><ul><li>Commodities </li></ul><ul><li>Real Estate </li></ul><ul><li>Cash & Safety Assets: </li></ul><ul><li>Money Market </li></ul><ul><li>Inflation linked bonds </li></ul><ul><li>Income Assets: </li></ul><ul><li>Bonds </li></ul><ul><li>Absolute Return Hedge Funds </li></ul><ul><li>Asset classes above do not include “Aspirational” assets such as Private Equity or Investment Real Estate </li></ul>Traditional “Balanced” approach falls short of truly diversifying across all 4 Economic Phases Best: Growth Assets Mixed: Real & Income Assets Worst: Cash & Safety Assets Best: Real Assets Mixed: Growth & Cash/Safety Assets Worst: Income Assets Best: Income Assets Mixed: Growth & Cash/Safety Assets Worst: Real Assets Best: Cash & Safety Assets Mixed: Real & Income Assets Worst: Growth Assets
    5. 5. Portfolio Asset Allocation: Tactical Changes over Market Cycles Sample Client Portfolio Allocation Asset Class Description Recovery Overheat Stagflation Reflation Income US & International Fixed Income 35% 25% 35% 45% Growth US & International, Large & Small Cap, Value & Growth 45% 35% 25% 25% Real Assets REITS, Commodities, TIPS 20% 30% 10% 0% Safety Ultra Short Fixed Income 0% 10% 30% 30%
    6. 6. Sample Global Balanced Portfolio Asset Class Description Weight Income (35%) Loomis Sayles Bond Lord Abbett Dev Local Markets Principal Preferred Calamos Convertible Templeton Global Bond 10% 5% 5% 5% 10% Growth (45%) Vanguard Growth Vanguard Value Tradewinds Global Value Rydex Security Mid Cap Value iShares Global Financials WisdomTree International x Financials American EuroPacific Growth Lazard Emerging Markets SPDR Emerging Markets Small Cap 5% 5% 5% 5% 5% 5% 5% 5% 5% Real Assets (20%) ING Clarion Global Real Estates Ivy Global Natural Resources Credit Suisse Commodities SPDR Gold Trust 5% 2.5% 2.5% 10% Safety Ultra Short Fixed Income 0%
    7. 7. Portfolio Process <ul><ul><li>Evaluate phase of economic cycle (Reflation, Recovery, Overheat, Stagflation) based upon: </li></ul></ul><ul><ul><li>Real Economic Growth </li></ul></ul><ul><ul><li>Inflation </li></ul></ul><ul><ul><li>Determine portfolio positioning, i.e. are we transitioning between phases or within a phase, and the tactical asset allocation weights based upon that analysis </li></ul></ul><ul><ul><li>Implement with appropriate investment vehicles </li></ul></ul><ul><ul><li>Use both passive ETFs and active Mutual Funds </li></ul></ul><ul><ul><li>Favor ETFs for efficient asset classes, e.g. Large Cap </li></ul></ul><ul><ul><li>Favor Active managers for inefficient or risky asset classes, e.g. Small Cap </li></ul></ul><ul><ul><li>Favor ETFs for Opportunistic Investments, e.g. Sector trades </li></ul></ul><ul><ul><li>Implement intra-asset class tilts </li></ul></ul><ul><ul><li>US vs. International </li></ul></ul><ul><ul><li>Growth vs. Value </li></ul></ul><ul><ul><li>Developed vs. Emerging </li></ul></ul><ul><ul><li>Sovereign vs. Credit </li></ul></ul><ul><ul><li>Opportunistic Themes or Trades </li></ul></ul>
    8. 8. Summary of Recent Portfolio Actions <ul><ul><li>January: Added Convertibles, Increased Corporate Credit, Trimmed Equity & safety asset </li></ul></ul><ul><ul><li>March: Added Commodity, Trimmed safety asset </li></ul></ul><ul><ul><li>April: Trimmed Large Cap, Added Small Cap, Trimmed International, Increased Emerging Markets </li></ul></ul><ul><ul><li>May: Increased International Equity, Trimmed safety asset </li></ul></ul><ul><ul><li>June: Trimmed Income, Increased Equity </li></ul></ul><ul><ul><li>July: Trimmed US REIT, Added Global REIT </li></ul></ul><ul><ul><li>August: Trimmed International Equity, Added Emerging Markets Small Cap, Overweighted Large Cap Value and Underweighted Large Cap Growth </li></ul></ul><ul><ul><li>September: Increased Gold, Trimmed Emerging Markets </li></ul></ul><ul><ul><li>November: Added Global Value, sold Preferreds </li></ul></ul><ul><ul><li>December: Added Canada </li></ul></ul><ul><ul><li>January: Trimmed Developing Markets, increased Emerging Markets and Global Technology </li></ul></ul><ul><ul><li>February: Sold Commodities, added Home Construction </li></ul></ul>
    9. 9. The Private Banking and Investment Group is a division of Merrill Lynch that offers a broad array of personalized wealth management products and services. Both brokerage and investment advisory services (including financial planning) are offered by the Group’s Private Wealth Advisors through Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S), a registered broker-dealer and registered investment advisor. The nature and degree of advice and assistance provided, the fees charged and client rights and Merrill Lynch’s obligations will differ among these services. Investment products offered by MLPF&S are not insured by the FDIC and are not guaranteed by Merrill Lynch or any of its affiliates. The banking, credit and trust services sold by the Group’s Private Wealth Advisors are offered by licensed banks and trust companies, including Merrill Lynch Bank USA (member FDIC) and Merrill Lynch Bank & Trust Co., FSB, or their affiliates. Investments involve risk, including the possible loss of principal investment. Alternative investments carry a high degree of risk and are not subject to the same regulatory scrutiny as mutual funds and other traditional investments. For these reasons, access to most types of alternative investments is limited to qualified investors. While requirements vary by product, alternative investments are typically appropriate only for investors who are designated as &quot;qualified purchasers&quot; or &quot;accredited investors.&quot;  The services described as being offered by Merrill Lynch Trust Company are provided by the Merrill Lynch Trust Company division of Merrill Lynch Bank & Trust Co., FSB, or Merrill Lynch Trust Company of Delaware. Merrill Lynch Bank & Trust Co., FSB, Merrill Lynch Trust Company of Delaware and Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S), a registered broker-dealer, are wholly owned subsidiaries of Bank of America Corporation. Investment products: MLPF&S and Merrill Lynch Trust Company make available investment products sponsored, managed, distributed or provided by companies that are affiliates of Bank of America Corporation or in which Bank of America Corporation has a substantial economic interest, including Columbia Management, BlackRock and Nuveen Investments. © 2009 Merrill Lynch, Pierce, Fenner & Smith Incorporated. All rights reserved. Member Securities Investor Protection Corporation (SIPC). Disclosures Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value

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