iSectors :: Information

iSectors^® FAQs

1. What makes iSectors investment allocations unique when compared to other investments?
iSectors Allocations are unique and offer multiple advantages to investors:

iSectors^® Post-MPT Allocations maintain optimal portfolio allocations by rebalancing portfolios regularly as the investment environment changes. iSectors is an enhanced approach to traditional Modern Portfolio Theory (MPT) that catapults MPT to a new level of excellence. iSectors Post-MPT models’ impressive returns and low risks can be attributed to:
- A more robust asset allocation algorithm that uses more than a dozen economic variables to determine and regularly rebalance back to an optimal portfolio allocation.
- A superior approach to diversification using asset classes such as: US Treasury bonds, real estate, infrastructure, commodities and others.
- Our approach considers “negative returns” as the “risk” investors want to avoid, volatility (standard deviation) is a less appropriate measure of “risk.” Standard deviation, the historical traditional measurement of risk measures both upside AND downside volatility as risk. For example, a stock or investment that has large upside volatility (unexpected gains) is considered to have the same level of risk as an investment with large downside volatility (unexpected losses) when measuring risk by standard deviation. Our approach is more congruent with behavioral finance and “real world” investor views that unexpected gains are a good thing.
- Low fees. In addition, all accounts are highly liquid and separately-managed accounts.
iSectors^® Endowment Allocations are institutional quality asset allocation models that embrace the philosophy pursued by the managers of Endowment portfolios at institutions such as Yale University. These endowment funds, have been aggressively allocating to "Alternative Investments" like Hedge Funds, Private Equity and Real Assets, for decades. The strategy of over weighting alternatives has enabled them to out-perform their university endowment fund peer group; they have achieved this superior performance while reducing overall portfolio volatility (risk). While the iSectors allocations are not designed to mimic a university endowment fund to the fullest extent, they do target a significant allocation to "Alternative Investments." While iSectors does allocate to alternative investments we do not invest in private partnerships which are illiquid and only available to accredited investors, (i.e. investors with a net worth exceeding one million dollars). All iSectors portfolios remain liquid and available to any institutional or individual investor they may be suitable for. These unique advantages are achieved by using alternative investments that are available either through an Exchange-Traded Fund (ETF), Exchange-Traded Note (ETN), open and closed end Mutual Funds or a SEC Registered Private Fund.
Your account is held in your name at an independent custodian; the securities held in your account belong to you. Our platform provides 24/7 access to your holdings, performance and tax reports. Therefore, you benefit from tax advantages, transparency, lower costs, liquidity and control not offered by mutual funds or other investments such as hedge funds.
iSectors is committed to the best service and low expenses. We are able to provide clients cutting edge investment management services and a world class web based reporting platform (updated daily) for between .25 and .45 basis points (0.25% and 0.45%) annually, depending on the strategies chosen (additional fees are charged for custody and trading. Your investment advisor will also charge a fee for his/her services. See below for more detailed expense information).

2. What type of securities does iSectors allocate to/invest in?
iSectors primarily utilizes exchange-traded funds – ETFs (which are baskets of stocks that trade like one stock) to achieve its allocation objectives. However, at times, it may be necessary to utilize Exchange-Traded Notes (ETNs), open or closed end mutual funds or other SEC-registered funds. ETFs can have multiple advantages when compared to mutual funds, including reduced management and commission costs, tax advantages, and improved liquidity.
Click here for our article that explains Why ETFs have lower fees than mutual funds.

3. How long has iSectors been in business?
iSectors allocations have been applied in investment accounts since 2005. iSectors, LLC is an affiliate of Sumnicht & Associates, LLC (Sumnicht) and, as such, iSectors and Sumnicht share certain employees' services. Sumnicht is an SEC registered investment adviser located in Appleton, Wisconsin. iSectors became a separate Registered Investment Advisor in August, 2008. Sumnicht & Associates has provided clients with independent investment advice and wealth management services since 1988. The firm was founded by Vern Sumnicht, CEO, MBA, CFP^®. Sumnicht & Associates is completely independent and is not affiliated with any bank, broker or asset management firm.

4. What credentials, experience and expertise does Sumnicht & Associates, LLC possess?
Sumnicht & Associates advises clients whose aggregate assets under management is $270 million (as of 12/31/2008) and employs a professional staff of ten with numerous qualifications, including two Chartered Financial Analysts (CFA), one Chartered Alternative Investment Analyst (CAIA), three Certified Public Accountants (CPA), two Certified Financial Planners (CFP) and four MBAs. Sumnicht & Associates has been awarded the following recognition over the last five years:

Ranked as one of the Top 100 Independent Private Wealth Managers in the Country by Bloomberg in 2003, 2004, 2005;
Ranked as one of the Top 75 Independent Multi-Client Family Offices in the Country by Bloomberg in 2004 and 2005;
Recipient of Small Business of the Year Award by the Fox Valley Chamber of Commerce and Industry;
Registered as an NFL Players Association Financial Advisor since 2004;
Vern Sumnicht was honored as one of the nation’s Top 100 Wealth Advisors by Worth Magazine in issues dated October 2005, 2006 and 2007 and was included in Worth’s expanded list of 250 Top Wealth Advisors in their October 2008 issue.

5. What is the risk/reward balance of iSectors Post-MPT Models compared to other more traditional investments?
The iSectors Post-MPT Series allocates its investments to as many as nine different asset classes that have less correlation to each other than the traditional asset classes more commonly used for portfolio diversification. iSectors’ research has shown that this strategy offers more effective diversification and can lessen the impact of prolonged market declines. Of course, it should not be assumed that future performance of any specific investment product, including iSectors, will equal past performance.

6. What are the total costs involved with implementing an iSectors investment account?

iSectors annual investment management and reporting platform fees are as follows:

0.45% - Post-MPT, Endowment, Liquid Alternatives and Strategic International Models
0.35% - Institutional Models
0.25%- Domestic Models

A flat annual $150 for custody and trading at Fidelity or Pershing – alternatively .10% annual custody and trading at Schwab with a $200 minimum will also be assessed on each account. Note: Fidelity recently began to charge a $75 fee to close an account.

iSectors investment allocations are only available through independent registered investment advisors (RIAs) who will charge their own, additional fee, for their services.

7. How are the fees calculated and when are they assessed?
The investment management, platform, and custodian’s annual fee are prorated and assessed quarterly, in advance, based upon the portfolio value at the end of the previous quarter. Fees charged by your advisor, depending upon your separate agreement with your advisor, may or may not be assessed in similar fashion.

8. What are the investment minimums for iSectors models?
iSectors requires the following minimums for each respective allocation series:

Domestic Series
Institutional Series
Strategic International
Liquid Alternatives
Post-MPT Series
Endowment Series

$25,000
$25,000
$25,000
$50,000
$50,000
$100,000

9. What is a separately managed account (SMA)? Why is this beneficial?
All iSectors allocation investments use separately managed accounts (SMA). A separately managed account is a brokerage account that is opened in your name and held at an independent custodian (such as Fidelity, Pershing or Schwab). After your account is opened and funds are deposited in the account, any and all securities in that account belong specifically to you (unlike a mutual fund or hedge fund where all investor assets are co-mingled in one account). With an SMA, all the securities in your account have their own individual tax basis, so you know what has been bought and/or sold in your account at any time. The corresponding gains and/or losses on those securities belong to you (unlike mutual funds when you may be responsible to pay taxes on gains incurred by a fund when someone else liquidates their shares). In addition, a performance report and realized/unrealized, gain/loss tax reports are updated daily and available to you over the internet at anytime from anywhere.

10. What types of iSectors accounts can be opened?
iSectors accounts can be opened for Individuals, Joint Tenants, JTWRS, trust accounts for spouses and families, revocable trusts, irrevocable trusts, UGTM accounts, business accounts, corporations, Investment Clubs, CRT accounts, Limited Partnerships and non-profit accounts can also be created. Depending upon the custodian chosen, foreign investors may also open an iSectors account.

11. Can I open an iSectors account using my retirement funds?
Yes, iSectors accounts can be opened for a traditional IRA, Rollover IRA, Roth IRA, SEP IRAs, 401(k), pension, other defined contribution or defined benefit accounts, and qualified or non-qualified retirement accounts.

12. Why are iSectors Allocations only available through Registered Investment Advisors?
iSectors wants clients to be pleased with their investments in iSectors. Today’s financial markets are complex, they offer expansive opportunities, but they are rapidly changing and volatile. A full-time, independent financial advisor is in a unique position to understand your financial situation. The fiduciary responsibility of an independent Registered Investment Advisor requires your advisor to legally place your interests above his/her own. Advisors can offer independent advice, help structure your portfolio, and diversify your investments in a way that will help achieve your personal financial objectives. After all, in your efforts to be a successful investor, isn’t that the legacy you want? An independent investment adviser can help you achieve your financial objectives in life.

13. I have additional questions, how can I find out more?

Phone:	1.800.iSectors (1.800.473.2867 )
Email:	info@isectors.com
Fax:	1.800.473.2867
Write:	iSectors W6240 Communication Ct. Suite 1 Appleton, WI, (USA) 54914-8549