Disclosures

Strategic Indexing: Investable Benchmarks

Absolute Return Strategies: 50/50 Portfolio, Tactical (T)Tactical 2x & 3x (T2/T3).

Former Strategy Verification Reports: Aggressive Growth, Global Growth, Long Short

Pledge: ETF PM’s Pledge to Give Back

The Spaulding Group, an independent third party that is not affiliated with ETF PM, has verified the performance of ETF PM’s representative accounts.

Investable Benchmarks Performance Disclosures

General Information

The Investable Benchmarks (IBs) are comprised of leading ETFs from Vanguard, iShares, ProShares, and Direxion. The performance estimates for the IBs relate to a range of hypothetical core models, strategies that David Kreinces first backtested in 2016. These portfolios do not take into account an individual’s investment objectives and financial circumstances. Consult your investment adviser before investing.

Mr. Kreinces was solely responsible for the development of all three IBs and he had full discretionary authority over the selection of investments. The Income & Growth (IG) portfolio is 42% Vanguard Total World Stock (VT), 8% REITs (VNQ), and 50% Long-Term Treasuries (TLT).

Mr. Kreinces modified the Income & Growth 2x (IG 2x) to be 42% S&P 500 2x (SSO), 8% REITs 2x (URE), and 50% Long-Term Treasuries 2x (UBT).

Mr. Kreinces further modified the Income & Growth 3x (IG 3x) to be 42% S&P 500 3x (UPRO), 8% REITs 3x (DRN), and 50% Long-Term Treasuries 3x (TMF).

Performance Estimates

The performance estimates reflect performance that would have been achieved by a hypothetical account with annual rebalancing. The performance estimates are backtested and have not been audited. Conservative estimates were used for underlying ETF performance prior to their inception. The performance estimates do not reflect trading fees associated with annual rebalancing, and assume reinvestment of dividends.

The performance estimates for all of the IBs are net of a 0.25% annual advisory fee. Each ETF PM advisory account is solely responsible for all advisory fees, commissions and other transaction charges, as well as any charge relating to the custody of securities in such account.        

Backtesting involves simulation of a quantitative investment model by applying all rules, thresholds and strategies to a hypothetical portfolio during a specific time period. The investable benchmark performance estimates do not reflect the returns of actual client accounts. Backtested performance does not represent actual trading and does not reflect the impact that material market factors might have had on ETF PM’s decision-making.

Historical performance estimates are not indicative of future performance. The investment return and principal value of an ETF PM account will fluctuate and may be worth more or less than the original cost when liquidated. The investment environment and market conditions may be markedly different in the future and investment returns will fluctuate in value.

The IBs were implemented, and will continue to be implemented, with a view towards low-cost diversification across multiple asset classes. The performance estimates presented are for comparison purposes only. All of the information in this report was taken from sources which we believe to be reliable, but we cannot guarantee perfect accuracy.

Leveraged ETFs: Leveraged ETFs do not deliver their exact multiple of the underlying index. On a regular basis, leveraged ETF returns may deviate materially from the underlying index multiple they target. Investors should not use leveraged ETFs without careful consideration, an appropriate asset allocation, and a disciplined risk control framework.

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50/50 Portfolio Performance Disclosure

General Information

The 50/50 Portfolio (“50/50”) is a hypothetical portfolio that reflects 50% Tactical (T) and 50% Income & Growth 3x (IG 3x).

The 50/50 performance estimates at ETF PM are backtested and have not been audited. The 50/50 performance estimates are net of all fees and assume reinvestment of dividends with annual rebalancing.

The 50/50 Portfolio account is charged an annual, all-inclusive fee of 1.0% of assets under management (AUM). Please see full disclosures for ETF PM’s T and IG 3x portfolios.

Benchmarks

The S&P 500 Index is an unmanaged index of common stocks that represents the U.S. stock market. The index is mainly comprised of large cap companies and reflects roughly two-thirds of the total domestic stock market value.

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Tactical (T) Performance Disclosure

General Information

All of our Tactical (T) performance results relate to the T representative account, an account that David Kreinces first traded in July 2014. Mr. Kreinces was solely responsible for the development of T and he has full discretionary authority over the selection of investments for, and he is primarily responsible for managing, ETF PM accounts that allocate to the T portfolio.

Performance

The performance results for T reflect a single account performance achieved by the respective representative account. Accordingly, the performance results are similar to the respective composite results but the figures are not identical.

The T representative account was chosen because it most closely conforms to the T investment strategy. Individual account performance will vary based upon the inception date of the account, restrictions on the account, and other factors, and may not equal the performance presented herein.

The performance results for T are net of all fees and expenses. Please see Tactical (T) for the latest performance report or request the report at info@etfpm.com.

Historical performance is not indicative of future performance. Additionally, the investment return and principal value of an ETF PM account will fluctuate and may be worth more or less than the original cost when liquidated. The investment environment and market conditions may be markedly different in the future and investment returns will fluctuate in value.

The T portfolio was implemented, and will continue to be implemented, with a view towards long-term capital growth and protection. The indices presented are for comparison purposes only. An ETF PM account employing T may not be as diversified as any of these indices and no index is directly comparable to T.

Fees

The representative T account was charged an annual, all-inclusive fee of 2.0% of assets under management (AUM). Advisory fees are disclosed in each client’s investment management agreement. The T accounts are responsible for all commissions and other transaction charges as well as any charges relating to the custody of securities.

Benchmarks

The S&P 500 Index (SPX) is an unmanaged index of common stocks that represents the U.S. stock market. The index is mainly comprised of large cap companies and reflects roughly two-thirds of the total domestic stock market value.

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Tactical 2x (T2) and Tactical 3x (T3) Performance Disclosures

General Information

All of our Tactical 2x (T2) and Tactical (3x) performance results relate to the T2 and T3 representative accounts which were first implemented in July 2014. The objective of T2 and T3 is to employ trend following rotation of leading exchange-traded funds (ETFs) with the use of up to 2x and 3x leverage, respectively, at select times.

Performance

The performance results for T2 and T3 reflect the single account performance achieved by the respective representative accounts. Accordingly, the performance results are similar to the respective composite results but the figures are not identical. Individual account performance will vary based upon the inception date of the account, restrictions on the account, and other factors, and may not equal the performance presented herein. The performance results for T2 and T3 are net of all fees.

Historical performance is not indicative of future performance. Additionally, the investment return and principal value of an ETF PM account will fluctuate and may be worth more or less than the original cost when liquidated. The investment environment and market conditions may be markedly different in the future and investment returns will fluctuate in value.

T2 and T3 were implemented, and will continue to be implemented, with a view towards long-term capital growth and protection. The indices presented are for comparison purposes only. An ETF PM account employing T2 and/or T3 may not be as diversified as any of these indices and no index is directly comparable to T2.

Fees

Each T2 and T3 advisory account was charged an annual management fee of 2.0% of AUM. ETF PM does not charge a performance fee on any of the firm’s accounts.

Advisory fees are disclosed in each client’s investment management agreement. The T2 and T3 accounts are responsible for all commissions and other transaction charges as well as any charges relating to the custody of securities.

Benchmarks

The S&P 500 Index (SPX) is an unmanaged index of common stocks that represents the U.S. stock market. The index is mainly comprised of large cap companies and reflects roughly two-thirds of the total domestic stock market value

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Pledge to Give Back

ETF PM pledges to give 5% of our annual advisory fees to the schools and charities selected by our clients. Initially, our pledge was to give 15% of our annual advisory fees but, in 2013, the percentage was lowered to 8, and in 2015 it was lowered to 5%.

The Pledge to Give Back is intended to run for the life of the firm. However, ETF PM reserves the right to change or modify our pledge as needed.

Clients may each submit one 501(c)(3) organization annually for approval.

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© 2013 ETF Portfolio Management, LLC

ETF Portfolio Management, LLC
350 Via Las Brisas, Suite 270
Newbury Park, CA 91320
Phone: (866) 409-5844 Toll-Free
Fax: (805) 480-1111
Email: info@etfpm.com

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