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Investment Strategy Performance
YTD 10/31/09 | 1 Year | Since Inception* | |
| RWA Aggressive | -1.30% | -5.06% | 12.08% |
| RWA Moderate Aggressive | 3.85% | -0.35% | 12.02% |
| RWA Moderate | 9.19% | 4.42% | 11.85% |
| RWA Moderate Conservative | 14.73% | 9.24% | 11.57% |
| RWA Conservative | 20.46% | 14.09% | 11.17% |
| RWA Income 50 | 26.39% | 18.95% | 10.65% |
| RWA Income 30 | 19.15% | 16.82% | 7.77% |
| S&P 500 | 14.92% | 7.15% | -2.23% |
| Important Disclosures |
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Disclosure for FormulaFolio Allocation Models and FormulaFolio Quantitative Investment Strategy Performance Information on the Simulated Strategies of Retirement Wealth Advisors, Inc FormulaFolio Investment Strategies (FormulaFolios): 2. The inception date of the FormulaFolio Allocation Models as they exist as of 5/1/2009 is 6/1/2008. Below is a timeline of the construction of the individual quantitative model portfolios that make up the Allocation Models. 11/2005 – Retirement Wealth Advisors, Inc was incorporated and registered with the State of Michigan as an investment advisor. 5/2006 – FormulaFolio Investment Strategies were made available to clients of Retirement Wealth Advisors, Inc. The original quantitative models were named as follows: RWA ROI FormulaFolio, RWA ROE FormulaFolio, RWA LP FormulaFolio, RWA Mid Cap FormulaFolio, RWA Top 5 FormulaFolio, RWA Smart International FormulaFolio, RWA Income FormulaFolio. 11/2007 – The original quantitative models were blended into a smaller group of models based on market capitalization and geographic location. These models were renamed: RWA Large Cap, RWA Mid Cap, RWA Small Cap, RWA Multi Cap, RWA International, and RWA Income. The RWA Alternative Asset Model was introduced to the allocation models. 1/2008 – The RWA Long/Short quantitative model was introduced to the allocation models. 6/2008 – The RWA Hg Equity and RWA Hg Income quantitative models were introduced to the Allocation Models. The original inception dates of the quantitative models as separate accounts and not part of the FormulaFolio Allocation Models is 11/2004. 1/2009 – The RWA Hg Equity quantitative model is renamed the RWA US Total Return and the RWA Hg Income quantitative model is renamed the RWA Total Return Income. Backtested performance is calculated by using a computer program and daily historical balance sheet and income statement filings for individual equities and daily price and volume data on index mutual funds and exchange traded funds. 3. Backtested performance does not represent actual performance and should not be interpreted as an indication of such performance. Actual performance for client accounts may be materially lower or higher than that of the FormulaFolios Allocation Models. Backtested performance results have certain inherent limitations. Such results do not represent the impact that material economic and market factors might have on an investment adviser's decision-making process if the adviser were actually managing client money. Backtested performance also differs from actual performance because it is achieved through the retroactive application of model portfolios (in this case, FormulaFolio Investment Strategy Allocation Models) designed with the benefit of hindsight. As a result, the models theoretically may be changed from time to time to obtain more favorable performance results. Backtesting also must simulate the impact of trading costs, share availability and thus the slippage of each transaction. Retirement Wealth Advisors, Inc has simulated all transactions at the average price of the high and low on the day a transaction was recommended by the quantitative models less 0.5% slippage. This may generate a result that provides more or less of a trading impact than actual investor results and should be considered when reviewing the performance illustrated. 4. Backtested performance results assume the reinvestment of dividends and capital gains and monthly rebalancing of the quantitative investment models that make up the FormulaFolio Allocation Models. The performance of the strategy reflects and is net of the effect of RWA’s annual investment management fee of 2.5%, billed quarterly in advance. Backtested risk and return data is a combination of live (or actual) RWA client results and simulated quantitative model data, and advisers fees, mutual fund fees and expenses have been deducted from both the live (or actual) results and the simulated index data. Although FormulaFolios are active strategies and may cause more short term capital gains than other investment strategies, short and long term capital gains, any resulting tax liability is not deducted from performance results. Performance results also do not reflect transaction fees and other expenses charged by broker-dealers, which reduce returns. RWA is not paid any brokerage commissions, sales loads, 12b1 fees, or any form of compensation from any mutual fund company or broker dealer. The only source of compensation from client investments is obtained from asset based advisory fees paid by the client. 5. For all data periods, annualized standard deviation is presented as an approximation by multiplying the monthly standard deviation number by the square root of twelve. Please note that the number computed from annual data may differ materially from this estimate. We have chosen this methodology because Morningstar uses the same method. In those charts and tables where the standard deviation of daily returns is shown, it is estimated as the standard deviation of monthly returns divided by the square root of 22. 6. Not all of RWA clients follow our recommendations and depending on unique and changing client and market situations we may customize the construction and implementation of the FormulaFolio Allocation Models for particular clients, including the use of more market neutral investment strategies, leveraged index mutual funds and/or ETFs. The performance and risk characteristics of custom asset allocations may differ materially from (and may be lower than) that of the index portfolios. 7. Performance results for clients that invested in accordance with the Index Portfolios will vary from the backtested performance provided on the site due to market conditions and other factors, including investments cash flows, mutual fund allocations, frequency and precision of rebalancing, tax-management strategies, cash balances, lower than 2.5% advisory fees, varying custodian fees, and/or the timing of fee deductions. As the result of these and potentially other variances, our clients have not and are not expected to have achieved the exact results shown since November 2004, when audited results became available for some of our quantitative models. Actual performance for client accounts may differ materially from (and may be lower than) that of the FormulaFolio Allocation Models. Clients should consult their account statements for information about how their actual performance compares to that of the FormulaFolio Allocation Models. 8. As with any investment strategy, there is potential for profit as well as the possibility of loss. RWA does not guarantee any minimum level of investment performance or the success of any Allocation Model or investment strategy. All investments involve risk (the amount of which may vary significantly) and investment recommendations will not always be profitable. 9. Past performance does not guarantee future results. 10. WHY GO TO ALL THIS TROUBLE? This type of analysis is important because a shorter time period introduces a large statistical sampling error for both risk and average returns. Past performance does not predict future performance, however, analyzing 30 years or more of simulated risk and return data is a more reliable source of information concerning the cost of capital for firms and their shareholders and the resulting expected returns for investors who trade their cash for shares and bonds of those firms. The result of this data is a probability distribution with an average return and a standard deviation around the average, which best characterizes future random events that are totally unpredictable like the roll of the dice or flip of a coin, yet these random events over long time horizons, like 30 years or more, accumulate to new distributions. These distributions are, to varying degrees, similar to a large sample of previous distributions, such as 30 years. Shorter time horizons demand lower risk investments, while longer time horizons allow for regression to the mean. The "mean" refers to the average expected outcome of returns, which is also the most probable outcome. The distribution of historical market data is a leptokurtic distribution, meaning it is not conclusive in any way as to the limits of losses or gains. The dice and coin flip does have limits, but the market does not. There is an unlimited risk on stock market investments that can not be clear in even very long term historical data. For example, in the stock market crash of 1929, the market declined 89% and many investors had leveraged their capital and lost all of their investment. The stock market is a risky investment and investors can lose all or nearly all of their money because of the risk of firms going out of business, general macroeconomic and political risk, and challenges to the ideas of capitalism in general. However, this analysis is far more useful than the traditional 1, 3, or 5 year returns and risk data used by the great majority of individual and professional investors. Without such longer term analysis, investors would be merely speculating on the risks and expected returns of their investments with a statistically unacceptable sample, like a gambler in a casino hopelessly trying to beat the casino statistician, who may be referred to as the dice, card, and roulette wheel actuary. This is in fact what investors do and several of studies have confirmed it is the source of their near zero average returns over the last 17 years (ending 2/1/2009), after inflation and taxes. As Louis Bachelier stated in the first published paper on the random character of stock market data, The Theory of Speculation (1900), "the expected return of speculation is zero." Statistically speaking, investors have a relatively high standard error of the mean (average return) with data of less than 30 years. 11. Your use of this site is acknowledgement that you have read and understood the full disclaimer; which is located below. Disclaimer and Privacy Policy Your use of this Website is acknowledgement that you have read and understood this complete page. The purpose of this site is to provide information. Our services are not completely described here and you should contact us directly if you are interested in knowing about or using our investment advisory services. Retirement Wealth Advisors, Inc is registered nationally with the Securities and Exchange Commission. We provide investment information that we believe to be useful and accurate. However, there cannot be any guarantees. There are many different interpretations of investment statistics and many different ideas about how to best use them. None of these offer guarantees. However, we believe that Index Fund investing is the best of these. We also provide links to information that we also believe to be useful and accurate. However, we have no control over this off-site information and cannot guarantee its accuracy. Below is the legal way of saying all this, plus a little more. Your use of this Website is acknowledgement that you have read and understood the disclaimer. DISCLAIMER: THERE ARE NO WARRANTIES, EXPRESSED OR IMPLIED, AS TO ACCURACY, COMPLETENESS, OR RESULTS OBTAINED FROM ANY INFORMATION POSTED ON THIS OR ANY LINKED INTERNET SITE. Nothing on this site should be interpreted to state or imply that past results are an indication of future performance. This site does not constitute a complete description of our investment services and is for informational purposes only. It is in no way a solicitation or an offer to sell securities or investment advisory services except, where applicable, in states where we are registered or where an exemption or exclusion from such registration exists. Information throughout this internet site, whether stock quotes, charts, articles, or any other statements regarding market or other financial information, is obtained from sources which we, and our suppliers believe reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Neither our information providers nor we shall be liable for any errors or inaccuracies, regardless of cause, or the lack of timeliness of, or for any delay or interruption in the transmission thereof to the user. All investments involve risk, including foreign currency exchange rates, political risks, different methods of accounting and financial reporting, and foreign taxes. |
