General Disclosure. This information has been developed internally and/or obtained from sources which MRA Associates (“MRA”), believes to be reliable; however, MRA does not guarantee the accuracy, adequacy, or completeness of such information nor does it guarantee the appropriateness of any investment approach or security referred to for any particular investor. MRA, its affiliates, and/or its clients may have an investment position in a security or strategy (or related or opposing security or strategy) discussed in this information and may change that position without notice at any time. This material is provided for informational purposes only and is not advice or a recommendation for the purchase or sale of any security.
This information may include commentary by MRA, in which case all or some of the following may apply: This information reflects subjective judgments and assumptions, and unexpected events may occur. Therefore, there can be no assurance that developments will transpire as forecasted. This material reflects the opinion of MRA on the date made and is subject to change at any time without notice. MRA has no obligation to update this material. MRA does not suggest that the strategy described herein is applicable to every client of or portfolio managed by MRA. In preparing this material, MRA has not considered the investment objectives, financial situation, or particular needs of any particular person. Before making an investment decision, you should consult your professional advisor, and you should consider whether the information provided in this material is appropriate in light of your particular investment needs, objectives, and financial circumstances. Transactions in securities give rise to substantial risk and are not suitable for all investors. This material is protected by copyright and all other laws, all rights reserved, and no part may be (i) copied, photocopied, or duplicated in any form, by any means, or (ii) redistributed without the prior written consent of MRA.
Investment Risks. As with any investment strategy, there is potential for profit as well as the possibility of loss. Asset allocation does not ensure a profit or guarantee against a loss. MRA does not guarantee any minimum level of investment performance or the success of any index portfolio or investment strategy. All investments involve risk and investment recommendations will not always be profitable. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown. The investment return and principal value of an investment will fluctuate, so that at any time an investment portfolio may be worth more or less than its original cost. Please contact MRA for additional information on portfolio performance results, data sources and descriptions, and fees.
Capital Markets Analysis. Optimization of allocations is based on MRA’s capital markets analysis. Expected returns and standard deviations of asset classes are consensus estimates gathered from 55 different sources. For additional information on MRA capital markets analysis, please contact a member of your engagement team.
Asset Class Expected Returns and Portfolio Changes. Analysis of changes is based on an average change among portfolio allocations used with MRA clients, based on forward-looking expected risks and returns from the portfolio optimization process. Illiquid allocations include a 5% allocation to farmland, up to a 10% allocation to life settlements, and implementation of private debt in fixed income.
Portfolio Allocations. The presentation uses hypothetical portfolios to illustrate the concept of mean-variance optimization. Portfolio allocations are detailed on the “Portfolio Composition” page and are comprised of allocations to the previously named indexes. The allocations within equities and fixed income represent global market capitalization in their respective asset classes. The optimal risk and optimal return portfolio are optimized portfolios using mean-variance optimization. Performance for all three portfolios is based on the current forward-looking assumptions MRA gathers from third party sources. Each portfolio has a different allocation to various asset classes. Historical performance for the portfolios reflects the performance of the underlying indexes for each asset class. Portfolios are index returns only, with no adjustment for fees.
Portfolio Optimization. None of the portfolios used for the illustration of mean-variance optimization within this presentation reflect a portfolio MRA would recommend for a client, but instead are used to illustrate investment concepts and applications MRA uses to construct an appropriate portfolio for a client. Forecasted data such as expected return or Monte Carlo simulation use the forward-looking assumptions previously mentioned.
Probability Distributions. Probability distributions are based on analysis of portfolio allocations in Morningstar Direct. The allocations use the forward-looking assumptions for the portfolios to develop a distribution bell curve assuming a normal distribution. Historical data show that asset classes and portfolios are not always normally distributed for all time periods. Distribution curves should be interpreted as a potential range of outcomes and not an exact prediction. Estimates of “1 in xx” years are based on percentiles on the distribution curve. For example, 1 in 100 years is the 1st percentile, 1 in 10 years is the 10th percentile, etc.
Sample Portfolio. The sample portfolio provided in this presentation is a representation of a possible allocation MRA could recommend but is for illustrative purposes only. Actual asset allocations will differ between clients based upon their investment objectives, financial situations, and risk tolerance. MRA makes no warranty, express or implied, that the depicted allocation will be used to manage an account, or that any specific performance returns identified and described will be achieved in a portfolio.
Model Index Portfolios. All model index performance data shown represent hypothetical results of market index returns designed to show certain risk-return characteristics. The model index and performance portfolios have been constructed using one or more underlying market index returns.
Limitations of Model Performance. MRA constructs its model index portfolios using forward-looking estimates of risk and return for each asset class. Model index portfolios represent a hypothetical reconstruction based on historical market data accumulated after the end of a given time period. This hypothetical performance record is merely a reflection of the performance of market indexes in the past. Accordingly, all of the model index portfolios can be constructed with the benefit of hindsight.
Model index performance does not represent actual performance and should not be construed as an indication of such performance. The model index performance results do not represent the impact that material economic and market factors might have had on the management decision-making process compared to actually managing client money during that period. Model performance also differs from actual performance because it is achieved through the retroactive application of an asset allocation designed with the benefit of hindsight.
Not Comparable to Actual Client Returns/Fees and Costs. Benchmarks, indexes, funds, and asset class performance shown does not reflect deduction of any MRA fees, trading costs, or other expenses of trading fund shares, but does reflect the reinvestment of dividends and other earnings. Results have not been audited or reviewed by any third party. Performance results for clients that invest in any actual fund or asset class will vary from the performance data shown due to market conditions and other factors, including client objectives, investment cash flows, size and timing of mutual fund (and other investment) allocations, MRA fees, trading costs, frequency and precision of rebalancing and reconstitution, tax-management strategies, cash balances, varying custodian fees, and/or the timing of fee deductions. The net compounded impact of the deduction of MRA fees over time will be affected by the amount of the fees, the time period, and investment performance. These and other factors may materially influence performance results and therefore actual client performance for any portfolio would only match actual fund performance by coincidence. Actual performance for client accounts may be materially lower or higher than that of the fund or asset class performance shown. Clients should consult their account statements for information about how their actual performance compares to that of the fund or asset class performance shown.
Fund Performance. Information regarding the mutual funds and alternative funds shown is provided for information only, does not reflect any specific time period when such mutual funds were held by MRA clients, and does not reflect any prior performance of clients. Additional information about each mutual fund and alternative fund is available from MRA. The recommended funds are as of a specific date and do not reflect past recommendations or future changes in recommendations. Mutual funds can lose value. Mutual fund investments are subject to market risk, fluctuate in value, and can result in actual loss of money. Diversification does not ensure against losses.
Illiquid Investments. Illiquid investments may not be suitable for all clients. Investors in illiquid investments must qualify for these investments based on suitability criteria, and they must complete subscription documents.
Ceres Farms. Ceres Farms LLC is not registered with the SEC. It is a private fund that relies on an exemption from registration requirements. The offering is suitable only for sophisticated investors who have the financial ability and willingness to accept the high risks and lack of liquidity inherent in an investment in the fund. Subscribers must meet the SEC’s definition of an “accredited investor”. Minimum investment is $100,000. Please see the fund’s private placement memorandum for details of the offering and full disclosure of conflicts and risks.
Vida Longevity Fund. Vida Longevity Fund, LP is not registered with the SEC. It is a private fund that relies on an exemption from registration requirements. The offering is suitable only for sophisticated investors who have the financial ability and willingness to accept the high risks and lack of liquidity inherent in an investment in the fund. Subscribers must meet the SEC’s definition of an “accredited investor”. Minimum investment is $100,000. Please see the fund’s private placement memorandum for details of the offering and full disclosure of conflicts and risks.