We have been managing investments since 2009, and as a fiduciary, we are always working to use all of the latest academic studies and data to obtain the best result for you. We continually seek to make improvements to our investment strategy that will allow for faster response times to various market environments, thereby reducing your risk and increasing your return. Our goal is to provide you with an investment strategy, that when all the factors are considered, results in the highest probability of long-term success. Our strategy utilizes diversification, the correlation between assets, and human behavior to achieve that goal. We can employ our strategy across different risk levels, which allows us to tailor the portfolio to your needs.
Backtested Portfolio Results
What is backesting?
Backtesting is a key component (but certainly not a perfect one!) of effective portfolio management development. It is accomplished by reconstructing, with historical data, trades that would have occurred in the past using rules defined by a given strategy. The result offers statistics to gauge the effectiveness of the strategy. Therefore, the following results do not represent the results of actual portfolio performance using client assets but were achieved by means of the retroactive application. It is in essence, what would have happened had this strategy been deployed in the past. The performance displayed represents total returns and includes reinvestment of interest and dividends and is net of our 1% annual advisory fee and trading costs, but it does not include taxes. We were not, during the period in question, managing money according to the strategy depicted. (We were of course managing money, but we were using a different strategy than the one we employ today.) The results may not reflect the impact that any material market or economic factors might have had on our use of the back-tested model if the model had been used during the period. Historical data and analysis should not be taken as an indication or guarantee of future performance. Past performance is no guarantee of future results and future performance may differ significantly from historical performance. All of the following results were obtained using only publicly traded exchange-traded funds, ETFs. There are limitations in making comparisons to benchmarks, as the benchmarks do not perfectly correspond to the strategy that we use. They are simply given as a reference for what other financial advisors and the general public may use as their investment strategy. The max drawdown indicates the worst period of return for the portfolio during the entire backtesting period and it should serve as a guide for the expected downside risk for the future. *Real Performance began on 1/11/2021, so all of the results posted after that start date are the exact returns achieved, they are not hypothetical.
Main Risk Categories:
Growth | Conservative Growth | Capital Preservation
Our growth, conservative growth, and capital preservation portfolios utilize the same primary strategy, with the difference being how much in equities is held at any one time. (The lower the percentage of equities, the less fluctuation the portfolio will have, which will also lead to a lower return.) The backtest starts in 2003, which is the oldest possible start date given the history of exchange traded funds. (Dual Momentum is the main engine that drives our strategy and it is basically how we invested from 2017-2020, so that is listed as a benchmark. Backtests for Dual Momentum have gone back to 1950 using indexes, and backtests for Momentum, in general, go as far back as 1223. (Human behavior is quite consistent throughout time.) SPY is 100% in equities, and the other benchmarks are listed according to the percentage of stocks vs. bonds, where 60/40 is 60% stocks and 40% bonds.)
Very Aggressive Risk Category:
Our 3x growth portfolio uses our growth strategy but with 3x ETFs, which have 3x the upside and downside of normal ETFs. This significantly increases both the risk and the return. The backtest starts in 2010, since most 3x ETFs were not in existence before then. Therefore, it should be noted that it does not include performance during a bear market.
Retirement Accounts (401k/403b/etc.) Held At Your Employer
Due to regulations, we can’t hold most 401ks/403bs/TSPs other employer based accounts directly nor do we have direct access, and therefore we most likely cannot place the trades on your behalf. This means that you must take the trading instructions from us, and then place the trades on your own. The backtest below is modeled using a 30-calendar day holding restriction, which most 401ks have. The results below are also based on the same-day execution of the trades, if this doesn’t happen, the performance will be lower, possibly significantly lower depending on the delay in implementing the trade. Due to the restrictions listed above that are placed on workplace retirement accounts, including the limiting of investment choices, the performance will be lower than the portfolios that we have direct control over with no restrictions.
All Portfolio Models Backtested Results
All Data, including the full backtest time period, plus 10 year, 5 year, and 3 year.
As we have mentioned, historical data and analysis should not be taken as an indication or guarantee of future performance. Past performance is no guarantee of future results and future performance may differ significantly from historical performance. The backtests are displayed to give you an idea of how our investment strategy has worked in the past and how it has differed from other investment strategies during that time. Prudent decisions are often made using history as a guide, but no one knows the future, and therefore the results should not be viewed as an expectation of what will happen in the future, but merely as a tool to better understand how our strategy works.