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The strategy comparison table and target investor profiles below should assist you in determining the possible suitability of our investment strategies for you and help narrow down your choice of a Model Portfolio. Then, we suggest you subscribe to a Trial Subscription. Since we do not provide individualized investment advice, we recommend you consult with a qualified financial advisor to help you determine suitability.
We offer different, generic Model Portfolio strategies to target the needs of different types of investors. The following discussion of Target Investor Profiles may prove helpful to you and/or an investment advisor in evaluating how each one of our generic strategies may, or may not, be suitable for your own situation.
Generally speaking, to determine what kind of investment strategy is best suited for your own special circumstances, you should be thinking about several key questions. Are you looking for regular, predictable income from your investments? Or are you prepared to take some risk in the shorter-term to achieve stronger portfolio growth over the long term in the form of capital gains? How much risk are you prepared to take ... specified as a percentage of the value of your portfolio? How long do you have until you may need the money? If you are investing for retirement 20 years from now, you can probably afford to take more risk than if you may need the money several years from now to buy a home, fund college expenses or provide a cushion during unemployment. Are you comfortable with the idea of an investment strategy that may take a "short" position in the stock market during Bear Market declines in order to make money? Do you have the investment sophistication to understand the potential benefits and pitfalls of such a strategy?
In any case, remember that our Model Portfolio strategies are designed to significantly reduce an investor's level of risk compared to the kinds of typical "growth" oriented portfolios recommended by many traditional investment advisors. To put the "Maximum Drawdown" statistics for our strategies into proper context, note that a Buy and Hold investor in an S&P 500 Index Fund would have suffered a 45% maximum drawdown of their portfolio value during the same time period. And the NASDAQ stock market index dropped more than 70% in value!
Even a traditionally "balanced" portfolio mix would have still exposed an investor to more risk than our Model Portfolio strategies. For example, a very common, balanced mix consisting of 40% bonds, 30% large-cap stocks and 30% small-cap stocks would have suffered about a 17% maximum drawdown in value.
We have a strong belief that many investors with traditional balanced investment portfolios are taking much more risk than they realize ... and their portfolio losses during Bear Markets can become so painful that they bail out -- often at the worse time! Steady discipline exercised by an investor can translate into stronger returns over the longer-term. And we believe that designing investment portfolios for low to moderate risk tolerance can help most investors maintain a disciplined approach through the ups and downs of the market.
Use the Maximum Drawdown statistic to help match a strategy with your risk tolerance. The Maximum Drawdown statistic in the table below specifies the largest "Peak to Trough " loss experienced by each strategy (on an end-of-month basis). Since the last 9-year period included a severe 3-year bear market, the recorded Maximum Drawdown for each strategy should provide a good indication of the relative riskiness of each strategy compared to alternatives.
We recommend that you read our What is Maximum Drawdown discussion and understand that you should decide what your own unique risk tolerance is and express it in terms of a percentage. If you do this, it becomes straightforward for you and/or a financial advisor to compare your risk tolerance percentage with the Maximum Drawdown percentage on each strategy alternative. Making this comparison may help you to determine which strategy is the best fit for your own risk tolerance.
| 12/31/07 | 9-Year Average Annualized Return | Maximum Drawdown | Account Type Suitability | Frequency Of Trades | Investment Objective | Minimum Account Size | Benchmark Series |
|---|---|---|---|---|---|---|
| Growth Portfolio | 12.1 % | - 10.7% loss | 401(k), IRAs, Taxable Brokerage | 10 / yr | Growth | $1,000 |
| Conservative Portfolio | 8.7 % | - 5.2% loss | 401(k), IRAs, Taxable Brokerage | 7 / yr | Conservative Growth | $1,000 |
| Performance Extension Series | ||||||
| Performance Xtender | 20.2 % | - 8.5% loss | IRAs, Taxable Brokerage | 14 / yr | Growth With Hedging | $15,000 |
| Max Xtender | 31.6 % | - 31.5% loss | IRAs, Taxable Brokerage | 8 / yr | $25,000 | |
