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The objective of the Conservative Growth program is to provide investors with a positive rate of return every year regardless of market conditions. This strategy is ideal for investors seeking a moderately conservative investment that is typically weighted 70% fixed income and 30% equities.
If market conditions warrant, this strategy maintains the flexibility to overweight or underweight either portion. The equity portion of the strategy is a non-diversified strategy that invests in style and sector specific mutual funds that have the potential to outperform similar investments over an intermediate-term basis. If there are not any favorable investments this portion may use “bear” funds or move to cash. The income portion has the flexibility to be allocated into any taxable fixed-income asset class which could include; high yield corporate bond funds, government bonds, domestic and international bond funds, TIPS, and others. In negative market conditions the fixed income portion of the portfolio can move to cash or utilize inverse bond funds.
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The goal of the program is to provide clients the ability and opportunity to participate in the various financial markets and to provide that participation with a reduced level of risk. The program is based on a disciplined risk reduction strategy of dynamic asset allocation/modeling. Utilizing a proprietary model that is trend following in nature and based on technical indicators, the program looks to put capital at risk only at appropriate times. The model used in this program is 90% mechanical and allows for the manager to override the model 10% of the time. This component allows for flexibility during unusual catastrophic events. Using a large universe of mutual funds, the program looks to capitalize on positive movements of different types of funds. Both short and intermediate time frames are capitalized on. Equity, bond, domestic and international funds are all options to be used within this program. Position size will vary accordingly with money market positions being taken as a defensive stance.
All investments assume some risk. It is not feasible to expect that risk to principal can be completely eliminated from any investment, including mutual funds. This program seeks to have a high reward to risk ratio. Capital preservation and consistent returns are the major driving forces behind the program.
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The Tactical Yield program is designed with a primary objective of capital preservation with a secondary objective of providing an attractive yield and a competitive total return while experiencing lower volatility than equity investments. The Tactical Yield investment committee seeks to achieve these goals, primarily by tactically moving assets between high yield corporate bond funds and money market mutual funds. During periods when high yield bonds are considered to have below‐average return potential, other types of bond funds which include U.S. Government and agency securities, foreign corporate and government bonds, floating rate instruments, convertible securities and municipal securities can become the primary bond asset classes used. Some of the factors considered when deciding to trade include prevailing market conditions and the predicted economic environment, input from bond fund managers and technical indicator signals. The portfolio also has the ability to hedge certain components using market timing to exchange between derivative‐based “long” and short or inverse bond funds.
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