With heavyweights like PIMCO entering the managed futures mutual fund space, interest appears to be rising from both investors and asset managers in this investment vehicle. PIMCO recently filed documents with the SEC for a new mutual fund that will pursue a quantitative trading strategy to capture trends in global markets and commodities. While PIMCO declined to comment, analysts from Morningstar indicate the interest from a large firm like PIMCO shows ongoing demand for managed futures despite poor performance in recent years.

1. With heavyweights like Pacific In-
vestment Management Company
(PIMCO) throwing its hat into the man-
aged futures mutual fund ring, interest
from both investors and asset manage-
ment in this investment vehicle appears
to be rising.
On August 16,
PIMCO filed a preliminary prospectus
with the Securities and Exchange Com-
mission, which calls for the mutual fund
offering that “seeks absolute risk-adjusted
returns.” The PIMCO TRENDS Managed
Futures Strategy Fund serves as the 42-year-
old firm’s new mutual fund in the space.
“The Fund seeks to achieve its investment
objective by pursuing a quantitative trading
strategy intended to capture the persistence
of trends (up and/or down) observed
global financial markets and commodi-
ties,” the prospectus reads.
While a PIMCO spokesperson was
unable to comment on the fund, ana-
lysts from independent research firm
Morningstar indicate that the interest
from the investment management firm
with nearly $2 trillion in assets under
management is emblematic of an over-
all shift in assets among certain alterna-
tive vehicles.
“Ithinkitshowsthatthereisademandeven
though the managed futures as a category has
performed poorly for the past few years,” said
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American Wealth Playing
Portfolio Defense
By Paula Vasan
Laif Meidell is president of American Wealth
Management and a FINRA registered representa-
tive with Foothill Securities, a hybrid Reno, Nev.-
based RIA firm. Meidell shares his thoughts with
MME regarding how he is responding to market
volatility by adopting a more
defensive portfolio position
with his AdvisorShares Meidell Tactical Advan-
tage ETF (aka MATH).
Recent sentiment shows investors are increasingly
fearful of volatility, according to the Volatility Index
DEFENSE, cont. on page 9
MME Q&A
A new study by retirement and investment
trends research firm Hearts & Wallets, LLC
found that more retirement firms are considering
the lifetime value of consumers—currently 55%,
upfrom43%in2010—showinganincreasedfocus
on younger investors.
Thesurveyincludednearly
two dozen leading distributors, employer-spon-
sored plans, insurers, asset managers and interme-
diary platform solution providers with more than
$12 trillion in AUA and more than $10 trillion in
AUM, serving more than 50 million retail custom-
Retirement Firms Target
Younger Investors
YOUNGER cont. on page 8
Retirement
By Erin Kello
What’s the Future of Alternative Mutual Funds?
FUTURE, cont. on page 6
Alternatives
By Michael Giardina
The Premier News Source
for Asset Management Leaders
September 9, 2013 | Volume 21 • Number 34 | www.mmexecutive.com | feedback-mme@sourcemedia.com
management executive
Scorecard
25 Largest Funds
P. 11
IN THIS ISSUE
ViewPoint
Benefits of a Knowledge Partner
P. 3
Executive Briefing
Trillion-Dollar Managers Abound
P. 4
ExpertView
Adding Managed Futures
P. 10
SOURCE: Cerulli Associates
ETF Strategist Expectations for
Growth in the Next Three Years, 2013
More than two-thirds of strategists
expect their growth to outpace that of
the wider ETF market.
ETF strategist
asset growth
will outpace the
ETF market
ETF strategist assets will
grow at a lower rate than the
ETF market
ETF strategist
assets will grow at
the same rate than
the ETF market
5%
68%
28%
MME090913_page01 1 9/5/2013 6:54:42 PM

2. The Premier News Source for Asset Management Leaders
MME041513_page02 1 4/11/2013 3:03:21 PM

3. www.mmexecutive.com
MME Editorial Board
Neil Bathon
Partner,
FUSE Research Network
Ted Benna
Founder,
401(k) concept
Lisa A. Cohen
President,
Momentum Partners
Richard Davies
Managing Director, Defined Contribution
Russell Investments
Carl Frischling
Partner,
Kramer Levin Naftalis & Frankel
Debralee Goldberg
Senior Vice President,
DST
Burton J. Greenwald
President,
B.J. Greenwald Associates
Christopher P. Keating
Head of Institutional Sales
RiverSource Investments
Peter Muratore
Chairman Emeritus
Money Management Institute
George Wilbanks
Managing Partner,
Wilbanks Partners
Operating in an environment where
we are all expected to do more with less,
asset managers increasingly rely on ser-
vice providers. By constantly reinvesting
in their businesses and infrastructure,
established providers can easily scale
and position asset managers for the fu-
ture. Combining the voice of the cus-
tomer and robust internal knowledge
resourcesintocreativenewtools,service
providers are continuing in their evolu-
tion as solution providers.
Innovation through Data Analysis
Greater transparency helps asset
managers improve decision making and
better understand their business oppor-
tunities and risks. Outsource providers
are ideally positioned to assist.
The ability to create actionable in-
formation—to harness raw data and
then analyze it—improves transpar-
ency. Companies are learning that their
fund-specific information on share-
holder investment patterns can be
used to reveal key trends. By unlocking
the knowledge in data, firms can better
understand—and act on—customer
preferences, investment behaviors and
more.
Delivering Insights & Best-Practices
Third-party providers have deep
insights into the marketplace as they
regularly witness the business trends
across their large and sophisticated cli-
ent base. Fund companies agree that
being a part of this customer commu-
nity is beneficial, as they gain a more
complete view of industry best-prac-
tices. Service providers contribute
important views to outside industry
groups and associations, and effective-
ly become a voice of the client, with
their representative opinions helping
to shape a wide array of policies and
regulatory mandates. In an era of rapid
technological changes, new regulatory
reform and the rise of new players in
the distribution chain, understanding
the position of others in the industry is
a decided benefit.
With the wave of new regulations
and changes to existing regulation, asset
managers continue to focus on compli-
ance. Service providers are assisting by
developing new solutions that automate
some of the compliance burden, deliv-
ering capabilities to help manage and
identify risks.
Evolution of Expectations
As the industry continues to change,
expectations are shifting too. The right
outsource partner invests in their core
capabilities, helping fund companies
streamline, gain efficiencies and grow.
Service providers are also consulting on
ways to implement regulations, respond
to shareholder expectations and navi-
gate new channels and new technolo-
gies, while continuing to deliver service
excellence. MME
George Costas and Nicole DeBlois are
Global Relationship Executives at Boston
Financial Data Services, Inc.
To view the complete version of this
Industry Commentary, visit the Mutu-
alFundServiceGuidewebsiteatmmex-
ecutive.com/mutual-fund-guide.Click
on the Transfer Agent section.
The Benefits of a Knowledge Partner
New Insights and Innovations through Outsourcing
Editor’s
Desk
View
Point
By George Costas and Nicole DeBlois
September 9, 2013 Money Management Executive
MME090913_page03 1 9/5/2013 6:55:05 PM

4. As Industry Consolidates, Trillion-
Dollar Money Managers Abound
The 50 largest asset managers account-
ed for more than US$38 trillion in assets
under management at the end of 2012. This
is a full US$4 trillion more than the year be-
fore, even as the biggest firms in the indus-
try continue to enlarge, according to The
Cerulli Report: Global Markets 2013.
Eleven money managers have assets in
excessofUS$1trillion(comparedwithnine
a year ago), and there are twice as many
firms with more than US$2 trillion in as-
sets (four compared with two, previously).
BlackRock is still the only global firm with
assets in excess of US$3 trillion, according
to the annual report.
While the trend for consolidation in the
asset management industry is not a new
one, “there has definitely been a quickening
of pace since the financial crisis,” said Shiv
Taneja, the firm’s London-based managing
director for international research in a state-
ment. “Big firms can do many good—and
not so good—things. Regulators have a
huge role to play here, and in their desire
to boost investor protection (a good thing)
should ensure they do not make it tough on
smaller firms,” added Taneja.
Chief Operating Officer
Leaving Calamos
Calamos Investments, a global invest-
ment management firm, announced the
planned departure of James Boyne, Presi-
dent and Chief Operating Officer, effective
September 30, 2013. Until that time, Boyne
will act in an advisory role and assist the
company in the orderly transition of his du-
ties and responsibilities.
Boyne joined Calamos in 2008 and
served in several executive positions since
then. He is pursuing a leadership position in
the non-profit sector, focusing on the bet-
terment of children and young adults.
“I appreciate Jim’s leadership during
his tenure at the firm and wish the best to
him and his family,” said John P. Calamos
Senior Chairman, Chief Executive Officer
and Global Co-Chief Investment Officer in
a statement.
The firm does not plan to replace the
role of President and COO, and Boyne’s re-
sponsibilities will be assumed by other se-
niorleadersatCalamos,includingthefirm’s
Executive and Operating Committees.
Morningstar: Wealth Management
Companies Poised for Success
Morningstar published its inaugural
issue of Financial Services Observer, a
research report examining the competi-
tive shifts in the U.S. wealth management
industry, companies responses to indus-
try changes following the financial crisis,
and which companies Morningstar equity
analysts think are poised to be a boon for
shareholders.
Notable points from the first Financial
Services Observer issue, “Differing Strat-
egies Will Contribute to the Evolution of
Moats in Wealth Management,” include:
• Financial services firms with the stron-
gest economic moats are those that serve
ultra-high-net-worth investors—those with
more than $20 million in investable assets.
Northern Trust and Morgan Stanley are
two such players in this segment;
• The high-net-worth customer seg-
ment—with between $1 million and $20
million of investable assets—is increas-
ingly competitive;
• Raymond James is a financial services
firm that is well positioned to compete in
the high-net-worth customer segment, be-
cause of the firm’s unique business model
in employing advisors; and
• Charles Schwab is considered as a
more successful wealth manager for the
mass affluent customer segment—those
with less than $1 million in investable as-
sets—while Bank of America’s large size
and scope of services could create a strong
competitive advantage for serving both
high-net-worth and mass affluent clients.
“Our research team views wealth man-
agement as a profitable business with
high shareholder returns, because these
firms tend to have wide economic moats,
or strong competitive advantages, which
we attribute to long-standing client rela-
tionships and falling costs as production
increases,” Jim Sinegal, Morningstar’s di-
rector of financial services equity research,
said in a statement.
Estimated Long-Term Mutual Fund
Flows Down
Total estimated outflows from long-term
mutual funds were $7.71 billion for the
week ending Wednesday, August 28, 2013,
as reported by the Investment Company
Institute.
Equity funds had estimated inflows of
$300 million for the week, compared to
estimated inflows of $1.34 billion in the
previous week. Domestic equity funds had
estimated outflows of $1.00 billion, while
estimated inflows to world equity funds
were $1.30 billion.
News scaN
ReseaRch
ExEcutivE BRiEFiNG
SOurce: cerulli Associates
Top-10 Asset Managers by Global Assets Under Management, December 2012
(uS $ in billions)
Rank Company AUM
1 BlackRock 3,792.0
2 State Street Global 2,086.0
3 Vanguard Group 2,000.0
4 PIMCO 2,000.0
5 Fidelity Investments 1,690.9
6 AXA Group 1,474.8
7 J.P. Morgan Asset Management 1,400.0
8 Bank of New York Mellon 1,386.0
9 Deutsche Asset Management 1,247.5
10 Capital Group 1,081.7
Money Management Executive September 9, 2013
MME090913_page04 1 9/5/2013 6:55:00 PM

5. Executive
Briefing
“One of the things
we always tell
investors is, you
can control your
cost you can’t
control your
return.”
—Gerri Walsh
Senior Vice President
Investor Education
FINRA
Quote of the Week
Hybrid funds, which can invest in stocks
and fixed income securities, had estimated
inflows of $1.15 billion for the week, com-
pared to estimated inflows of $1.11 billion
in the previous week.
Bond funds had estimated outflows of
$9.16 billion, compared to estimated out-
flows of $11.14 billion during the previous
week. Taxable bond funds saw estimated
outflows of $6.26 billion, while munici-
pal bond funds had estimated outflows of
$2.91 billion.
Turner Introduces Turner Emerging
Markets Fund
The Turner Funds have introduced the
Turner Emerging Markets Fund, which
invests in about 60-100 growth stocks of
all market capitalizations from issuers tied
economically to emerging markets.
The no-load Turner Emerging Markets
Fund is offered in both Institutional Class
shares (TEEEX) and Investor Class shares
(TFEMX).
Invesco Rolls Out New Share Classes
Invesco has launched a variety of share
classes to provide financial advisors with
greater access to Invesco Global Markets
Strategy Fund for their clients.
Effective August 28, 2013, the fund is
now available through Class A, C, R, R5, R6
and Y shares. The fund’s original H1 shares,
launched September 26, 2012, converted
to Y shares.
First Trust Announces Name Change
for First Trust ETF
First Trust Advisors L.P. announced
that the Board of Trustees of First Trust
Exchange-Traded Fund IV, has approved
a name change for First Trust High Yield
Long/Short ETF, a series of the Trust. Effec-
tive September 4, 2013, the Fund’s name
changed to “First Trust Tactical High Yield
ETF.” The Fund’s ticker symbol (HYLS) will
not change.
The Fund is an actively managed ex-
change-traded fund that seeks to provide
current income as its primary investment
objective.TheFund’ssecondaryinvestment
objective is to provide capital appreciation.
Under normal market conditions, the Fund
invests at least 80% of its net assets (plus
the amount of any borrowing for invest-
ment purposes) in high yield debt securi-
ties that are rated below investment grade
at the time of purchase or unrated securi-
ties deemed by the Fund’s advisor to be of
comparable quality.
Loomis Sayles Welcomes New Head
of Emerging Markets
Loomis, Sayles
Company an-
nounced that Peter
Marber has joined
the company as head
of emerging markets
investments.
Marber’s du-
ties will encompass
emerging markets
fixed income and equity investing. He will
report to Jae Park, chief investment officer.
“As emerging markets have grown in
importance we have continued to add in-
vestment professionals focused in this area.
Peter’s depth of experience and expertise
will help ensure we bring the full power of
our firm’s resources to bear in identifying
emerging markets investment opportuni-
ties for our clients’ portfolios,” said Park in
a statement.
Manulife Names New MD To
Institutional Sales Team
Manulife Asset Management an-
nounced that Scott S. Eversole has joined
the firm as Managing Director on the insti-
tutional sales team. Based in San Francisco,
Eversole reports to Frank Saeli, Senior
Managing Director and Head of U.S. Sales
and Relationship Management.
Eversole, whose appointment is effec-
tive immediately, is responsible for institu-
tional asset management sales in the west-
ern U.S. MME
StatiSticS
PETER MARBER
SOURCE: Morningstar
This is a 250% increase over 2010.
This rate is for the United States
through 2015.
7.3%
$132B
SOURCE: US SIF
ProductS
arrivalS
September 9, 2013 Money Management Executive
MME090913_page05 2 9/5/2013 6:55:42 PM

6. Phil Guzeic, a Morningstar analyst. “It’s
not necessarily that it discreetly is a big
deal, it’s just indicative of the trend in the
industry that there are these persistent
trends systematically over time, investors
want access to them, and it’s getting more
liquid and cheaper to get this access.”
Morningstar data indicates
that U.S. open-end managed
futures mutual funds have in-
creased in total net assets and
fundssince2008.AsofJuly31,
there were 52 total funds and
over $10 million in net assets
for the managed futures cat-
egory. But in the 2008-2013
period, the number increased
fromonein2008to52in2013,
which points to a growing de-
mand in this niche investment area.
According to Morningstar, managed
futures funds managed by Paris- and Bos-
ton-based Natixis Global Asset Manage-
ment’s AlphaSimplex and Credit Suisse,
with offices in New York, have been able
to post good numbers when compared to
the year-to-date ending in August. The
Credit Suisse Managed Futures Strat-
egy Fund (CSAIX) and the Natixis ASG
Managed Futures Strategy Fund (AS-
FYX) bulldozed through the managed
futures category’s return for the year-to-
date, and publicized positives in the 4-6%
return range.
Overall, managed futures have posted
negative returns for the year-to-date at
-3.20% and the one-year at -7.58%. When
compared to conventional markets, the
SP 500 Index and the Barclays Capi-
tal U.S. Aggregate Bond Index were
polar opposites over the same periods of
measurement. For stocks, figures were
near -0.08% for the year-to-date and
nearly hit an 18% return for the one year.
Bonds fared much worse when the Bar-
clays Capital Indices benchmark reached
about -2.84% and -2.12 for the one year
and year-to-date at the end of last month.
Jordan Drachman, portfolio manager
of the Credit Suisse Managed Futures
Strategy Fund, said the managed futures
strategy “essentially does well when you
have stable trending markets.”
“We’ve seen some steady trends, for in-
stance a lot of fixed-income has been go-
ing down, and equities have been steadily
going up and those types of trends can
createagoodenvironmentforamanaged
futures strategy,” Drachman explained.
Decision makers at the Natixis ASG
Managed Futures Strategy
utilize similar tactics.
“We believe it has been a
high performer because it
doesn’t focus on a fixed set of
time horizons for identifying
trends, but rather is adaptive
based on the recent environ-
ment,” said Jerry Chafkin,
president of Cambridge,
Mass.-based AlphaSimplex
Group.
The ’40-Act structure warrants men-
tioning because open-end mutual funds
need to be transparent and disclose fi-
nancials. An inherent problem in the
’40-Act format is daily pricing on man-
aged futures funds, which are essentially
a hedge fund-like vehicle.
“The one nuisance is that some ’40-Act
mutual fund requirements preclude tak-
ing positions that will be physically deliv-
ered or they have to be 100% collateral-
ized, which doesn’t allow for the amount
of leverage in these managed futures
positions,” Guzeic explained. “They have
to access the strategies through a swap
agreement through a bank, and they will
do a total return swap, so they don’t have
physical delivery.”
This swap is costing 20-30 basis points,
according to Guzeic, who added that cus-
tomary hedge fund compensation was in
the “two and twenty” range.
Due to its characteristic to take vari-
ous positions in futures and option swaps,
the industry has been under added regu-
latory scrutiny by the Commodity Fu-
tures Trading Commission. On August
13, following news that the U.S. Court of
Appeals for the D.C. Circuit had upheld
the CFTC’s amendments to Commis-
sion Regulation 4.5, the CFTC said that
it would adopt “harmonization” rules for
companies registered with both the SEC
and the CFTC.
This means that commodity pool op-
erators of investment companies under
the ’40-Act umbrella will “accept the
SEC’s disclosure, reporting and record-
keeping” systems going forward. The
agency did not respond to our requests
for comment.
When the U.S. Court of Appeals first
accepted the watchdog agency’s appeal,
mutual fund executives and the indus-
try saw the added financial inquiry as a
“redundant regulation,” according to the
Investment Company Institute.
In a statement, the ICI said previ-
ously that it was “currently reviewing the
CFTC’s latest release in detail” as it was
adamantly against the agency’s proposed
amendments from February 2011 due
to “duplicative burdens and unnecessary
costs on funds and their investors.”
Last week, an ICI spokesperson dis-
closed that it was still reviewing the pro-
posed harmonization rules and would be
unable to comment on specifics.
Industry players like Chafkin are less
worried because “regulations governing
exchange traded futures contracts are al-
ready established for the most part.”
“We believe this process will be good
for managed futures strategies as regula-
tory clarity reduces regulatory risk and
broadens interest,” Chafkin said while
noting that adopted harmonization rules
can rectify instances where both agencies’
rules conflicted.
Shifts in assets from the hedge fund
industry to the ’40-Act structure for li-
quidity purposes may “drive additional
launches because investors prefer the
oversight, liquidity of a ’40-Act fund,”
Guzeic said.
However, for the funds already estab-
lished, they are happy with the inflows
wherever they are coming from.
“I think what we’ve seen is an interest
in managed futures as a strategy in gen-
eral, because over the long term it does
have a low correlation to most other asset
classes because it can go long and short in
different asset classes,” Drachman noted.
MME
FUTURE
from page 1
Alternatives
JORDAN DRACHMAN
Money Management Executive September 9, 2013
MME090913_page06 2 9/5/2013 6:55:26 PM

7. www.mmexecutive.com
MME Editorial Board
Neil Bathon
Partner,
FUSE Research Network
Ted Benna
Founder,
401(k) concept
Lisa A. Cohen
President,
Momentum Partners
Richard Davies
Managing Director, Defined Contribution
Russell Investments
Carl Frischling
Partner,
Kramer Levin Naftalis Frankel
Debralee Goldberg
Senior Vice President,
DST
Burton J. Greenwald
President,
B.J. Greenwald Associates
Christopher P. Keating
Head of Institutional Sales
RiverSource Investments
Peter Muratore
Chairman Emeritus
Money Management Institute
George Wilbanks
Managing Partner,
Wilbanks Partners
Operating in an environment where
we are all expected to do more with less,
asset managers increasingly rely on ser-
vice providers. By constantly reinvesting
in their businesses and infrastructure,
established providers can easily scale
and position asset managers for the fu-
ture. Combining the voice of the cus-
tomer and robust internal knowledge
resourcesintocreativenewtools,service
providers are continuing in their evolu-
tion as solution providers.
Innovation through Data Analysis
Greater transparency helps asset
managers improve decision making and
better understand their business oppor-
tunities and risks. Outsource providers
are ideally positioned to assist.
The ability to create actionable in-
formation—to harness raw data and
then analyze it—improves transpar-
ency. Companies are learning that their
fund-specific information on share-
holder investment patterns can be
used to reveal key trends. By unlocking
the knowledge in data, firms can better
understand—and act on—customer
preferences, investment behaviors and
more.
Delivering Insights Best-Practices
Third-party providers have deep
insights into the marketplace as they
regularly witness the business trends
across their large and sophisticated cli-
ent base. Fund companies agree that
being a part of this customer commu-
nity is beneficial, as they gain a more
complete view of industry best-prac-
tices. Service providers contribute
important views to outside industry
groups and associations, and effective-
ly become a voice of the client, with
their representative opinions helping
to shape a wide array of policies and
regulatory mandates. In an era of rapid
technological changes, new regulatory
reform and the rise of new players in
the distribution chain, understanding
the position of others in the industry is
a decided benefit.
With the wave of new regulations
and changes to existing regulation, asset
managers continue to focus on compli-
ance. Service providers are assisting by
developing new solutions that automate
some of the compliance burden, deliv-
ering capabilities to help manage and
identify risks.
Evolution of Expectations
As the industry continues to change,
expectations are shifting too. The right
outsource partner invests in their core
capabilities, helping fund companies
streamline, gain efficiencies and grow.
Service providers are also consulting on
ways to implement regulations, respond
to shareholder expectations and navi-
gate new channels and new technolo-
gies, while continuing to deliver service
excellence. MME
George Costas and Nicole DeBlois are
Global Relationship Executives at Boston
Financial Data Services, Inc.
To view the complete version of this
Industry Commentary, visit the Mutu-
alFundServiceGuidewebsiteatmmex-
ecutive.com/mutual-fund-guide.Click
on the Transfer Agent section.
The Benefits of a Knowledge Partner
New Insights and Innovations through Outsourcing
Editor’s
Desk
View
Point
By George Costas and Nicole DeBlois
September 9, 2013 Money Management Executive
MME090913_page03 1 9/5/2013 2:23:01 PM

8. ers and supporting more than 60,000 reg-
istered reps.
When thinking of lifetime value, that
means a focus on investors in the accu-
mulation phase of saving. “Traditional
firms are becoming more interested in
younger investors. They re-
alize that acquisition should
be a priority and they have
to think about acquiring in-
vestors when they are a little
younger generally in their
late 30s and 40s,” said Chris
Brown, principal Hearts
Wallets. That’s when people
form those lasting relation-
ships,” he added.
Brown indicated that
increased competition for the larger ac-
counts of older investors could be driving
this newfound interest. “There was more
of a thought in the past that it was cheaper
to acquire accounts later when the balanc-
es are larger rather than trying to bring
people with smaller balances along,” he
noted.
“Nowthat’sshifting,possiblybecauseof
increased competition for people in their
50s and 60s. Firms are realizing that it’s
expensive to get the assets when people
are at that point and maybe it is a better
strategy to take in smaller accounts and
build the relationships,” he stated.
Messaging for investors in the accu-
mulation phase is a big piece of the puzzle.
“Part of the study is that we went out and
looked at the homepages of the leading
online BDs and enrollment kits for 401(k)
providers. A lot of the goals and mes-
saging are not aligned with the needs of
younger investors. We’ve had comments
from people in our focus groups about
the “typical old white guy” who is seen in
the commercials for the brokerage firms,”
Brown said.
Preparing not only for retirement but
also for life’s financial challenges is im-
portanttoyoungerinvestors.“Someofthe
things we saw were that both the enroll-
ment kits and the websites tended to leave
out a lot of the needs and goals of younger
investors. The focus is so much on retire-
ment that they forget about the things
younger investors are looking for,” said
Brown. “This includes building an emer-
gency fund, saving for college, children
they don’t have yet and a home,” he noted.
Pricing is another touchpoint when
it comes to the younger demographic.
“The fees are another issue.
Younger people are looking
for clear pricing, they want to
comparisonshop.Theywantto
know the cost and how it com-
pares to other firms. There are
some firms that do a nice job
of laying out the costs. They
say here is what it costs to use
our platform versus our com-
petitors,” Brown stated. ”We
think if these firms changed
the revenue model a little bit it could be
profitable. The margins won’t be as high
as most of these firms are public com-
panies and they have quarterly earn-
ings to meet. They have concerns about
keeping margins where they are and it’s
tough to change the business model,” he
added.
Brown cites two companies that could
shakeupthespace—NestWise(abusiness
unit of LPL) and Learnvest. Instead of
giving investments they give service levels
and the cost.
Still the revenue model for firms like
NestWise and Learnvest are yet to be
proven. It was announced in late August
that LPL would be shuttering NestWise
September 1 due to unmet growth targets.
To increase participation among inves-
tors in the accumulation phase, providers
are working with plan sponsors to target
specific demographics, making use of
technology and utilizing behavioral driv-
en innovations.
“We have a comprehensive plan review
report broken up by age bands and the
age bands are 30 and younger, 30-39, 40-
49, 50-59 and 60 plus,” said John Prescott,
vice president of relationship management
and strategic initiatives for CPI Qualified
Plan Consultants. “It reports to the em-
ployer and the advisors the participation
rates and the deferral percentages on each
bracket. If the employer and the advisors
select a bracket that is not participating as
much as it should, we put together Pow-
erPoint presentations that they can use in
specific employee education meetings,” he
notes.
Using technology that younger inves-
torsarefamiliarwithisanotherpartofthe
strategy, Prescott said. “We have 60 iPads
that we use in enrollments for the younger
generation and they really relate to that.
‘This is my generation’s equipment.’ We
hand out 20 of these in a classroom set-
ting. We let them use the iPad to access
their participant account.
“Another tool is auto enrollment, which
we are pushing hard. It’s a proven fact that
people do not ‘un-enroll.’ This is a great
toolforallagebracketsandprobablymore
effective for the under 40 crowd,” said
Prescott.
Prudential is using behavioral cues in a
soon-to-be released plan that is being test-
ed primarily on millennial companies.
“We’vetestedafewretirementreadiness
meters. The first didn’t do so well. It was
overly sophisticated, there was too much
depth on the algorithm,” said George
Castineiras, senior vice president of Pru-
dential Retirement’s Total Retirement
Solutions. One of the clients we tested it
on is made up of 70% millennials—also
known as Generation Y. The greatest re-
sponse was, ‘I like this but I don’t know
what you are asking me to do to elevate my
success rate,’ ” he stated.
To more clearly articulate the pur-
pose of the meter, Castineiras indicated
the program was changed to focus on
achievement. “We changed it and now
we call it an achievement meter. This is
behavior based. If you are contributing
you get a point, if you are contributing
at a higher level you get another point, if
you are optimizing the match from the
employer you get another point, if you
don’t have any outstanding loans, you
get another point,” he stated.
“That made it much easier for indi-
viduals to understand right behaviors.
It’s driving on average two to three be-
havior changes that were not in place
before,” noted Castineiras. MME
youNgEr
from page 1
Retirement
GEORGE CASTINEIRAS
Money Management Executive September 9, 2013
MME090913_page08 3 9/5/2013 6:55:46 PM

9. that measures the price that consumers are
willing to pay for downside protection. So,
during the past several weeks you have be-
come more defensive, with 50% in cash and
littleequityexposure.Howdoesthiscompare
with your previous allocation model, and
whyareyousodefensivenow?
We think the best solu-
tion is to have a process that
lets the portfolio adapt to the
prevailing market trends by
selecting those areas that are
in uptrends and then allocat-
ing to those areas that have the
greatest probability to outper-
form. We were 100% invested
in stocks from the start of the
year through May, but our
models began reducing our equity expo-
sure in mid to late June.
Ourshiftfromstockstobondsandcash
was in part a function of stocks underper-
forming shorter-term bonds. Additionally,
high volatility is inherently bearish for the
stock market, so when we see high volatil-
ity we use an additional non-linear trend-
ing model to tell us what if any positions
should be sold to reduce the portfolio’s
volatility.
How have investors been responding to
thedefensivenessofyourfund?
Quite favorably I think. We have seen
a pickup in inflows into the fund the past
couple of months as we have worked to
lower the portfolio’s volatility. I think
advisors are watching our moves and ap-
preciate our efforts to protect their clients’
assets during these turbulent times. How-
ever, we also participated in the market
rally earlier in the year while some of our
competitors didn’t.
What is the fund’s performance since in-
ception? What is the current asset allocation
ofthefund?
MATH has returned 12.49% since in-
ception.
We’re 20% foreign stock, 5% U.S stock,
5% commodities, 19% short-term bonds
and 51% cash.
Whatmotivatedthelaunchofyourfund?
We have been successfully running the
strategy for clients since 2008, well before
the launch on June 23, 2011. We saw that
there was an opportunity to provide our
style of investing to the market by part-
nering with AdvisorShares, and given the
fund choices consumers had available at
the time we felt we could pro-
vide additional value that in-
vestors weren’t getting.
What makes your Advisor-
Shares Meidell Tactical Advan-
tageETFunique?
The fund is designed to cap-
ture gains during bull markets
and protect assets during bear
markets. The fund’s ability
to shift from 100% cash and
bondsto100%stockscreatesamechanism
designed to limit the fund’s drawdowns
during bear markets. To do this we look
at an investment pool of roughly 55 ETFs
and use a quantitative, non-emotional ap-
proach to selecting where in the market to
be invested at any given time. The fund’s
investment process allows it to be adaptive
to the markets and align the portfolio to
the prevailing market trends.
WhoisthisETFbestsuitedfor?
Ithinkthisfitsintheportfoliooftheper-
son who wants a mechanism to dial down
the portfolio’s volatility during market
corrections as well as having a strategy for
getting back into the market once trends
reverse up. Those that are more risk averse
might see MATH as a core holding where
as those with a larger appetite for risk may
use the fund as a satellite position.
You are a principal of your own indepen-
dent RIA firm. How do your clients react to
volatilityingeneral?Howdoesyourposition
atanRIAinfluencethisETF?
I feel I have a greater appreciation of
what the average advisor goes through and
what investors want from them, versus
someone who is more removed from the
investment experience. We want the advi-
sortolookgoodinfrontofhisorherclients
and want MATH to help them do that.
Wheredoyouseethemostopportunityin
region/assetclass?
After having underperformed U.S. eq-
uities for most of the year we are seeing
some foreign equities moving back into
the portfolio, so if the stock market can
rally higher I think foreign stocks could
start to outperform.
WhatareyourfavoriteETFsnow?Why?
WehaveownedtheiShareEuropeETF
(IEV) for several weeks now and when
we were buying it Europe was still a dirty
word, but the price was moving up. I like
the fact that we can see trends emerging
early enough to identify and participate in
them. We also own the Powershares DB
Commodity index (DBC), which again
has underperformed most of the year but
is holding up quite well now given the geo-
political backdrop we are looking at today.
Criticssaythefund-of-fundmodelisdead
due to higher fees, lack of transparency, etc.
Howdoyourespondtothem?
First, with ETFs there is complete trans-
parency on a daily basis as to the holding
intheportfolio.Ihavethesameissueswith
the lack of transparency in mutual funds,
but that doesn’t exist with ETFs and cer-
tainly not with MATH. So, the transpar-
ency argument is actually a strength for
ETFs. Regarding higher fees, the fact that
we own primarily index ETFs inside the
fund makes us more competitive on a fee
basis and we are very competitive if not
significantly when it comes to comparing
us to actively managed mutual funds and
those funds are managing tens of billions
of dollars. If people vote with their wallet,
there is a lot of money in those funds that
says it’s not dead.
Have managers of purely institutional as-
sets and/or public funds (state pensions, trea-
suries,endowmentsandfoundations,i.e.not
assetmanagerswhodealwithprivatefunds)
utilized actively managed ETFs to a large de-
greeyet?
Most institutions won’t consider a fund
like MATH until it has a three-year track
record, so we still have that hurdle but we
are less than a year away. MME
MME QA
DEFENSE
from page 1
LAIF MEIDELL
September 9, 2013 Money Management Executive
MME090913_page09 4 9/5/2013 6:56:25 PM

10. The 2008 and 2009 global financial
crisis left many investors disappointed
with the high volatility and negative per-
formance of their portfolios and leading
them to re-evaluate the risk reducing
ability of asset allocation. They were
surprised to find that many of the his-
torically non-correlated asset classes had
become highly correlated
during the crisis, rendering
asset allocation less effective
at diversifying returns and
lowering risk. As such, it is
no coincidence that many in-
vestors are now implement-
ing hedging strategies (such
as short futures contracts),
in conjunction with their as-
set allocation strategy, in an
effort to better manage port-
folio volatility, avoid large losses during
substantial market declines, and create
a smoother overall investment experi-
ence.
As asset managers increasingly focus
on risk management, it is imperative that
they develop strategies to combat both
individual and systemic risks, which can
be detrimental to investors’ ability to gen-
erate wealth and maintain prosperity in
retirement.
Historically, the common answer to
overcoming portfolio volatility and large
portfolio losses has been to stay invested
in the market; continue saving and in-
vesting in your portfolio across all market
conditions; when the market goes down,
ride out the storm—eventually growth
will return and the damage to a portfolio
will be repaired. When the damage is as
devastating to portfolios as the most re-
cent crisis, the recovery time may be lon-
ger than investors heading toward retire-
ment can afford.
If nothing else that crisis stressed the
importance of non-correlated diversifi-
cation and risk management, two of the
primary benefits to including managed
futures in an investor’s portfolio. Utiliz-
ing futures contracts within a hedging
strategy provides an inversely correlated
asset class that is tailored to perform best
during periods of volatility and financial
crisis. The equity market has a tendency
to fall sharply during periods of high vola-
tility and rise slowly during periods of low
volatility, making managed futures im-
portant simply for the diver-
sification benefits they offer.
Managed futures traders
participate in more than 150
markets around the world
thatdealincurrencies,energy,
minerals, and commodities,
among others. They also have
the ability to realize profits
from positive and negative
developments in multiple
markets at the same time by
practicing both long and short trading
strategies as conditions dictate.
Now that managed futures are avail-
able in a mutual fund wrapper retail
investors have access in a highly cost
effective manner that maintains liquid-
ity. Previously, hedging strategies using
futures were accessed through cum-
bersome limited partnerships, which
required a K-1. The bulk of managed
futures funds use multi-managers that
have access to, and employ, a number of
underlying commodity trading advisors,
which creates another layer of fees and
could be a potential downside to these
types of funds. The high expenses are a
factor of the fact that these funds engage
in a tremendous amount of trading and
there is almost always a market open
somewhere in the world. One of the
things that expensive trading brings to
investors is downside risk management.
The investor also must bear the expense
of the fund manager, but paying for a
manager to manage the allocation and
monitor the risk and performance of
managers specializing in specific futures
can be well worth the incremental cost
to reduce risk and to get the diversifica-
tion benefits.
Below are some additional facts inves-
tors should know about futures contracts:
• Are agreements to trade cash back
and forth with the exchange at the end of
each trading day based on market move-
ments
• Are based on broad market indices,
bothdomestic(SP500,Russell2000,etc)
and international (EAFE, MSCI Emerg-
ing Markets, FTSE, Nikkei, etc.)
• Have leveraging power of 12 to 1 (i.e.
the upfront cash needed to invest in $100
of futures notional contracts is about $8)
• Enable the strategy to operate based
upon a small cash position of typically 3%
to 5% of portfolio assets
• Have virtually no counterparty risk,
as any changes in their values are settled
in cash at the end of every day
If investors really want to move the
needle in their portfolios, managed fu-
tures should be 5% to 10% of the total
portfolio. Managed futures will reduce
overall volatility because of their non-
correlated nature to other holdings
within the portfolio. By lowering your
portfolio volatility, if you’d like to invest
more in a certain sector of the market,
managed futures can allow you the con-
fidence to do just that.
As more risk management strategies
hit the marketplace, it will be imperative
the advisors and investors “look under
the hoods” of each method. It is likely
that those strategies continuing to man-
age portfolio volatility via asset allocation
willstillbeexposedtoperiodsofsystemic
risk, in which asset allocation will be ren-
dered ineffective. Identifying those strat-
egies that address both types of risk are
likely to provide a better overall invest-
ment result. MME
Andrew Rogers is Chief Executive Officer
of Gemini Fund Services, LLC, which pro-
vides comprehensive, pooled investment
solutions as an engaged partner to inde-
pendent advisors.
Managed Futures Can Increase Diversification and Reduce Risk
By Andrew Rogers
ExpertView
10 Money Management Executive September 9, 2013
MME090913_page10 1 9/5/2013 6:56:00 PM

11. Lipper Performance Report:
The 25 Largest ETFs Mutual Funds
Scorecard
Total YTD to 52 Weeks 2 Years* 3 Years* 5 Years*
Net Assets 12/31/12 8/2/12 7/28/11 7/29/10 7/31/08
($ in Millions) to to to to to
Fund Name 6/30/2013 8/1/13 8/1/13 8/1/13 8/1/13 8/1/13
Source: Lipper
September 9, 2013 Money Management Executive 11
MME090913_page11 1 9/5/2013 6:56:57 PM

12. Hyatt Regency Boston | September 19 - 20, 2013
To be held on September 19th and 20th at the Hyatt Regency Boston, this year's
meeting is jam-packed with expert speakers, engaging breakout sessions and ex-
hibitors you won't want to miss!
Register today to join NICSA this Fall in Boston
www.nicsa.org/gmm2013
Join us at the 2013 NICSA
General Membership Meeting!
MME080513_page07 2 7/31/2013 5:10:36 PM