As the market dips and the fear of a worldwide Coronavirus pandemic grows, financial advisors must ask themselves, am I putting my clients in a position to succeed during the current market turmoil? Elite financial advisors know all too well that client’s portfolios must be protected from downside risk. No client ever wants to lose money, yet they all want to take part in the upside of the markets. Therefore, many investors invest their money with financial advisors rather than just in savings accounts and CDs.
Over that past decade a new generation of investors have entered the market. Some of these investors may not have been invested in 2008 and so all they really know is a bull market. Elite financial advisors know how to prepare clients up for success in varying market conditions by setting and managing realistic client expectations.
Financial advisors work with clients to determine their specific risk tolerance and to build their ideal portfolio. All financial advisors understand that no two clients are alike and most importantly, don’t like to lose money. So how can an adviser help his clients participate in the markets upside while protecting from market drawdowns? iSectors® Post-MPT Allocation series helps to achieves this objective.
iSectors Post-MPT Allocation Series consists of two dynamic models that adapt to changing market conditions as they occur. iSectors designed the Post-MPT Allocation models to help investors become more proactive in an ever-changing environment. The models utilize a more robust algorithm that evaluates over a dozen real-world factors that influence a unique portfolio allocation universe comprised of up to 9 low correlated asset classes with the objective of taking maximum advantage of upside volatility while simultaneously not losing money. The result is the potential for increased returns with lower drawdowns (potential losses). The Post-MPT Allocations are iSectors’ flagship allocation models.
The graph below compares an investment in iSectors Post-MPT Growth Allocation to an investment in the S&P 500 Index. The comparison considers returns on rolling 12-month periods for both investments from 2/1/2005 to 12/31/2019. In any 12-month period that the S&P 500 was negative, the iSectors Post-MPT Growth Allocation outperformed it during that period 89% of the time and only captured only 42% of the loss. In any 12-month period that the S&P 500 was positive, but with a gain of less than 10%, iSectors Post-MPT Growth Allocation outperformed it 65% of the time, while capturing 173% of the gain. In addition, when the S&P 500 gained over 10% in a 12-month period, iSectors Post-MPT Growth Allocation still managed to capture 71% of the gain.
The graph below compares an investment in iSectors Post-MPT Moderate Allocation to an investment in the S&P 500 Index. The comparison considers returns on 128 rolling 12-month periods for both investments from 3/1/2008 to 12/31/2019. In any 12-month period that the S&P 500 was negative, the iSectors Post-MPT Moderate Allocation outperformed it during that period 86% of the time and only captured only 54% of the loss. In any 12-month period that the S&P 500 was positive, but with a gain of less than 10%, iSectors Post-MPT Moderate Allocation outperformed it 58% of the time and captured 152% of the gain. In addition, when the S&P 500 gained over 10% in a 12-month period, iSectors Post-MPT Moderate Allocation still managed to capture 58% of the gain.
Both iSectors Post-MPT Growth and Moderate Allocation can help protect your client from downside risk. For more information about these strategies please visit our web site at www.isectors.com or can contact Scott Jones, Director of Business Development at 800-869-5184 or [email protected].