Global Hedged Growth and Income Strategy

Transcription

1 Global Hedged Growth and Income Strategy Deliberate, Purposeful Investing January,

2 STAR Wealth Partners is a seasoned wealth management team with expertise in Global/US Hedged Equities and Global Tactical ETF Management. Partnervest Advisory Services LLC Actively managed global model portfolios and hedged strategies Fusion Investment Management Global strategy experts using Fundamental Valuation and Behavioral Finance Cinque Partners, LLC A seasoned analysis and research team from Wells Fargo Private Client group with expertise in the US market and conservative option strategies 2

3 R. Scott Umstead, President and CEO Ex-President for Wachovia Securities, LLC s Eastern Division Private Client Group, Richmond, VA. EVP, Divisional Officer (Eastern Division) for Prudential Securities, New York City, NY. 25 years with Merrill Lynch, 14 years in Senior Management. Former President & CEO of RIA firm, Sweetwater Asset Management, Pittsburgh, PA. Scott Dooley, CFA, Managing Director (CIO & Portfolio Manager) Co-Founder, Partner and Creator of the Fusion Process. Recognized by Institutional Investor News as one of the 20 Rising Stars of Hedge Funds. BS degree with Honors in Finance from Grove City College and an MBA from the University of Chicago - Booth School of Business. Brian S. Sommers, CFA, Director and Portfolio Manager Over 20 years of investment management experience including experience managing portfolios for Taft-Hartley, endowments, foundations, corporations, individuals and public entities. Former CIO for McKinley Carter Wealth Services. MBA from University of Pittsburgh s Katz Graduate School of Business. Chris Romano, CFA, Director of Research & Trading Magna Cum Laude, BS degree University of Pittsburgh, Information Science Major, Minor in Business. Blue Vase Securities, LLC in 2002 as System Administrator and brokerage support, and director of ITS s IT Department in

4 Investment Philosophy The portfolio consists of a non-traditional core a Global Buy-Write Exchange Traded Fund. Satellite holdings are a select group of tactically managed ETFs/Mutual Funds that take advantage of opportunities in the market, beyond that of the Core Asset Class. 4

5 Why Exchange Traded Funds (ETFs)? ETFs are baskets of securities that track a specific market index and combine elements of both a stock and a traditional mutual fund. Like a stock, ETFs trade on an exchange, while also having the diversification benefits of a traditional mutual fund. Expense ratios are much lower Lower Taxes Single Share Class Structure More transparency Option selling opportunities 5

6 What are Actively Managed ETFs? Actively managed ETFs are designed to combine the best elements of both Passive ETFs and Active Mutual Funds. Daily Transparency (ETF) Single Share Class (ETF) Inter-day trading (ETF) Active Management (Mutual Funds) Broad Diversification (Mutual Funds) 6

7 Hedged Growth and Income Strategy Objective Market appreciation and quarterly income. Investor profile Risk adverse clients seeking to increase investment income while keeping ahead of inflation Unique investment strategy Actively managed portfolio with alternative income strategies. Seeks to outperform the equity risk premium with lower downside while offering income potential 1,2 Best use A core alternative designed to improve a portfolio s overall risk/reward ratio 1 Investing in options entails investment risks. See Disclosures for important risk information concerning investments in options. 2 No levels of distributions can be expected. There can be no assurance that this or any strategy, account, or the Benchmark will be able to implement its investment objective or avoid substantial losses. 7

8 Why a Buy-Write Strategy? * BXY: CBOE S&P 500 2% Out-of-the-Money BuyWrite Index This graph is for illustrative purpose only and is intended to reflect performance of the BXY and S&P 500 Benchmarks. This graph is not representative of actual investments or intended to reflect performance of any portfolio. These indicated indices are not intended to be investable or otherwise be used, in and of themselves, to determine which securities to buy or sell. Please see disclosures section for information regarding use of indices. Past performance is no guarantee of future results. 8

9 Strategy Focus Improve the long portfolio Seek better risk-adjusted returns using a multidiscipline process. Add a return stream: volatility When the markets are down, volatility tends to rise. We use options to benefit from this negative correlation, turning volatility into a source of additional return. 1 We will hedge more or less, based on our market outlook. Capture more income: premiums Over time, our hedging strategy pays option premiums that we convert to income. 2 How We Invest in Today s Markets Improved, multi-discipline long process Options premiums and dividends for income Volatility options hedge for extra return 1 Investing in options entails investment risks. See Disclosures for important risk information concerning investments in options. 2 No levels of distributions can be expected. There can be no assurance that this or any strategy, account, or the Benchmark will be able to implement its investment objective or avoid substantial losses. 9

10 VEGA Core Plus Asset Classes Closed-End Funds Preferred Stocks Emerging Market Debt MLP s Floating Rate 10

11 Take more than you give up Capturing more of the market s upside and less of its downside will outperform the market over time. Draw from other sources of return Diversify long-only investments with a compelling non-correlated return source. More Return Sources, More Income yesterday Long-only today Additional sources of return Earn more income Target a 4% annual income, which most actuaries recommend for retirees. 1 Income 1 No levels of distributions can be expected. There can be no assurance that this or any strategy, account, or the Benchmark will be able to implement its investment objective or avoid substantial losses. 11

12 Important Disclosure No statement is to be construed as a recommendation to purchase or sell a security. An investor should read and understand a security s prospectus before investing. Likewise, this presentation does not constitute investment advice for any particular person or concerning any security or strategy. Investment advice should be tailored to a client s particular situation and goals. Thus, you should speak with a Partnervest investment advisory representative concerning your situation. All investments and strategies involve risk, including the ones presented herein. Such risks include, but are not limited to, possible loss of principal. Investors are advised to be especially diligent concerning options investing and prior to buying or selling an option, a person should read Characteristics and Risks of Standardized Options which is available through your financial advisor or online at If performance figures are presented, actual performance depicted comprises client accounts invested in the VEGA Core Plus strategy, which strategy commenced September 18, To help ensure that large cash flows do not skew results positively or negatively, composite returns are a time and dollar weighted average through the date shown. The composite example does not include every account currently in VEGA Core Plus, but is intended to be a representative illustration of the strategy metrics. Excluded accounts include: accounts invested in another strategy during the period depicted, and accounts with non-manager constraints imposed by the client or Advisor. The performance of the S&P 500 is total return with dividends reinvested. Actual performance is net of actual fees and expenses. If performance figures are presented, model returns are inherently unreliable as they do not reflect how the strategy actually would have performed during the period presented. Returns are presented net of fees, however a client s costs and returns may materially deviate from others in the strategies due to size, timing and frequency of investments and withdrawals. Any single past transaction presented is not provided for purposes of demonstrating performance, rather it is presented to describe the methodology of the strategy. Thus the results of the single transaction should not be taken as representative of what other transactions produced which could be materially worse than that shown by the single transaction. Past performance is not indicative of future returns. These materials do not constitute tax, legal or accounting advice. Moreover, investments are Not FDIC insured May Lose Value and Have No Financial Institutional Guarantee. Investment Management services provided through Partnervest Advisory Services LLC. A more detailed description of the investment advisor and its management approach are available in the advisor s Form ADV Part II, available by contacting Partnervest Advisory Services, LLC., Attn: Compliance Department, 1216 State Street, 3 rd Floor, Santa Barbara, CA Contact your Investment Advisor Representative for advice concerning your specific circumstances. STAR II Model Portfolios are sub-advised by Fusion Investment Group, LLC, or another subadvisor at Partnervest s discretion. Cinque Partners, LLC provides research. 12