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Navigating Volatile Markets Pdf
- 1. tactical strategic Constrained sM tactical absolute Unconstrained sM return NavigatiNg vo l ati le Ma rk e ts Genworth Financial Wealth Management, Inc. 48233 06/24/09
- 2. iMportaNCe of asset alloCatioN A s s e t A l l o c At i o n i s r e s p o n s i b l e f o r o v e r 9 0 % o f t h e vA r i A n c e i n p o r t f o l i o p e r f o r m A n c e . 91.5% Asset Allocation 4.6% Securities Selection 1.8% Timing 2.1% Other Factors Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. Brinson, Hood & Beebower, Financial Analysts Journal, 1986 Brinson, Singer & Beebower, Financial Analysts Journal, 1991 Genworth Financial Wealth Management, Inc. Pg. 1 of 9 GFWM321_InvestPack (2009_05)
- 3. alterNatiNg seCUl ar Bear aNd BUll Markets D o w J o n e s i n D u s t r i A l Av e r A g e : 1 9 0 6 – m A r . 2 0 0 9 Market Regime BEAR BULL BEAR BULL BEAR BULL BEAR 1/14/2000- Dates 1906-1921 1921-1929 1929-1942 1942-1966 1966-1982 1982-2000 3/31/2009 Length in Years 15.5 Years 8 Years 12.5 Years 24 Years 16.5 Years 17.5 Years 8+ Cumulative Return -15.31% 496.51% -75.62% 970.98% -21.93% 1408.9% -35.09% Annualized Return -1.06% 24.9% -10.55% 10.47% -1.49% 16.84% -4.58% 10,000.00 1,000.00 100.00 10.00 1906 1910 1915 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2009 (March) Used with permission by Ned Davis Research. For more information please visit, www.ndr.com The Dow Jones Industrial Average (a registered trademark of Dow Jones & Co., Inc) is an unmanaged index composed of 30 common stocks. Past performance is no guarantee of future results. It is not possible to invest directly in an index. Returns shown above do not reflect the reinvestment of dividends or other distributions, and represent only the price appreciation of the index. Genworth Financial Wealth Management, Inc. Pg. 2 of 9 GFWM321_InvestPack (2009_05)
- 4. alterNatiNg seCUl ar stoCk Market regiMes D o w J o n e s i n D u s t r i A l Av e r A g e : 1 9 0 6 – m A r . 2 0 0 9 1906-1921 1921-1929 1929-1942 1942-1966 1966-1982 1982-2000 2000 – Mar. 2009 TyPe oF Bear Bull Bear Bull Bear Bull Bear MarkeT LenGTh In 15.5 8 12.5 24 16.5 17.5 8+ years annuaLIzed -1.06 24.9 -10.55 10.47 -1.49 16.84 -4.58 reTurn(%)* InFLaTIon n/a1 -0.3 -0.6 2.9 7.0 3.2 2.5 Index (CPI)2 reaL reTurn3 n/a1 25.2 -9.95 7.57 -8.49 13.64 -7.08 1 Information not tracked for this period. 2 Data is annualized. 3 Real return is the return on an investment reduced by the effects of inflation on its value. Data is annualized. Used with permission by Ned Davis Research. For more information please visit, www.ndr.com * Chart does not reflect dividends. Source for Inflation Index (CPI): Bureau of Labor Statistics. The Dow Jones Industrial Average (a registered trademark of Dow Jones & Co., Inc) is an unmanaged index composed of 30 common stocks. Past performance is no guarantee of future results. It is not possible to invest directly in an index. Returns shown above do not reflect the reinvestment of dividends or other distributions, and represent only the price appreciation of the index. Genworth Financial Wealth Management, Inc. Pg. 3 of 9 GFWM321_InvestPack (2009_05)
- 5. CyCliCal Markets withiN seCUl ar Markets D o w J o n e s i n D u s t r i A l Av e r A g e : 1 9 6 6 – 1 9 8 2 Bear Bull Bear Bull Bear Bull Bear Bull Bear Bull Bear Bull Bear -25.2% 32.4% -35.9% 50.6% -16.1% 31.8% -45.1% 75.7% -26.9% 22.3% -16.4% 34.9% -24.1% 0.65 2.15 1.47 0.92 0.57 1.13 1.90 1.79 1.43 0.52 1.61 1.01 1.29 years years years years years years years years years years years years years 1065 1065 1024 1024 985 985 Dow Jones Industrial Average Dow Jones Industrial Average 947 947 911 911 877 877 843 843 811 811 780 780 750 750 722 722 694 694 668 668 642 Total Change Over Secular Bear: -21.9% 642 618 Total Chart Length: 16.44 Years 618 594 594 572 572 19 6 7 1968 196 9 197 0 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 Used with permission by Ned Davis Research. For more information please visit, www.ndr.com The Dow Jones Industrial Average (a registered trademark of Dow Jones & Co., Inc) is an unmanaged index composed of 30 common stocks. Past performance is no guarantee of future results. It is not possible to invest directly in an index. Returns shown above do not reflect the reinvestment of dividends or other distributions, and represent only the price appreciation of the index. Genworth Financial Wealth Management, Inc. Pg. 4 of 9 GFWM321_InvestPack (2009_05)
- 6. s&p 500 iNdex positive aNd Negative days 60% 50% 53.5% 54.0% 51.1% 48.9% 46.5% 46.0% 40% 30% 20% 10% 0% 1950-2008 Bear 1966-1982 Bull 1983-1999 Up Days % Down Days % Used With Permission: Crestmont Research, www.crestmontresearch.com The S&P 500 (a registered trademark of the McGraw Hill Companies) is an unmanaged basket of 500 stocks that are considered to be widely held and thus believed to be a good indicator of overall market performance. This index of common stocks is weighted by market value. You cannot invest directly into an index. Genworth Financial Wealth Management, Inc. Pg. 5 of 9 GFWM321_InvestPack (2009_05)
- 7. foUr approaChes to asset alloCatioN tactical strategic constrained sm tactical Absolute unconstrained sm return Genworth Financial Wealth Management, Inc. Pg. 6 of 9 GFWM321_InvestPack (2009_05)
- 8. asset alloCatioN approaChes - defiNitioNs strategic Asset Allocation Strategic approaches create a mix of asset classes designed to capture market returns based on long-term capital market assumptions, while balancing risk and volatility. The goal of a Strategic Asset Allocation approach is to put the positive winds of “sailing” markets to work in your portfolio. tactical constrainedsm Asset Allocation Tactical ConstrainedSM approaches attempt to capture broad market returns while also seeking to take advantage of shorter term opportunities or mitigate risks through moderate allocation shifts. Tactical ConstrainedSM approaches may also put the positive winds of “sailing” markets to work in your portfolio, but they also create the potential for the portfolio strategist to add additional value through active, near term allocation decisions. tactical unconstrainedsm Asset Allocation Tactical UnconstrainedSM Asset Allocation approaches remove the limits on the extent and frequency of allocation shifts, allowing the portfolio strategist to move more aggressively in response to changes in their outlook. Tactical UnconstrainedSM Asset Allocation approaches can provide flexibility for “rowing” markets when headwinds place a premium on active asset class management. Absolute return Asset Allocation Absolute Return strategies are for risk-averse investors comfortable with modest returns in exchange for highly active risk management that may include frequent allocation shifts, non-traditional asset classes and/or alternative strategies. Absolute strategies may be used for attempting to “row” toward your goals regardless of the stock market’s direction. Genworth Financial Wealth Management, Inc. Pg. 7 of 9 GFWM321_InvestPack (2009_05)
- 9. ChoiCe of portfolio strategists s t r At e g i c tA c t i c A l c o n s t r A i n e D sm Avatar goldman sachs callan Associates gfAm new frontier J.p.morgan litman/gregory state street tA c t i c A l u n c o n s t r A i n e D sm Absolute return gfAm Avatar rochdale gfAm stadion J.p.morgan Genworth Financial Wealth Management, Inc. Pg. 8 of 9 GFWM321_InvestPack (2009_05)
- 10. for further information on the specific strategists offered in the asset allocation approaches, please contact your financial advisor. for more complete information about the various investment solutions and fees associated with them, please refer to the schedule h disclosure Brochure. Capital Brokerage Corporation and Genworth Financial Wealth Management, Inc. are Genworth Financial companies. Capital Brokerage Corporation member FINRA. Pg. 9 of 9 GFWM321_InvestPack (2009_05)