iSectors® Global Allocation Strategies

The iSectors® Global Series are based upon Modern Portfolio Theory (MPT) and offer 5 different risk utility portfolios allocated to U.S., international, emerging market equity and fixed income securities. The fixed income portion of these portfolios is diversified across a range of low-cost exchange-traded funds (ETFs) holding mortgage-backed, municipal, and corporate bonds with various maturities. A portion of the fixed income allocation is invested in ETFs that hold non-investment grade securities, high-yield bonds and emerging market debt instruments in an effort to add diversification and the potential for increased returns. The equity portion of the portfolios is allocated among a diversified basket of domestic and international low-cost equity index-based ETFs. In addition, fundamentally-weighted index ETFs are used in an effort to enhance return and reduce volatility.

iSectors® Global Allocation Series models provide investors with diversified stock/bond portfolios that attempt to produce market or near-market returns by investing in low-cost index Exchange Traded Funds (ETFs). Research has shown that the majority of investor returns are due to their asset allocation, and not security selection. iSectors® Global Allocations’ passive strategies eliminate a significant portion of an investor’s costs typically paid to the managers of mutual funds using an active management style. Research has shown that the vast majority of active managers underperform the indexes, and a significant reason for this is the costs of their management fees and commissions. By eliminating those costs, the iSectors® Global Allocations can provide investors with index-type returns with a similar risk profile. Both fundamental and cap-weighted index ETFs are selected for the domestic and international equity asset classes. Whenever possible, fundamental ETFs were used, as fundamentally-based indexes have historically produced both higher absolute and risk-adjusted returns over the longer term.

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