How Do You Plus A Portfolio Strategy Without Changing It?
Introducing PortfolioPlus ETFs
YOUR ASSET ALLOCATION STRATEGY. PLUS A LITTLE MORE.
PortfolioPlus ETFs are a suite of exchange traded funds that add 25% more daily exposure to popular broad-based indexes. These ETFs allow investors to obtain $1.25 worth of daily exposure to their benchmark index for every $1.00 invested. Advisors can apply these leveraged products to their existing asset allocation strategies to seek greater upside potential over time.
PORTFOLIOPLUS ETFs COULD ALLOW YOU TO:
- Target increased daily exposure to common broad-based indexes;
- Maintain allocations to the asset classes of the indexes within your strategy; and
- Provide magnified returns in order to seek outperformance over time.
PortfolioPlus ETFs deliver access to additional levels of exposure to magnify returns in a cost-effective, transparent, liquid structure, in order to help portfolios work harder.
PORTFOLIOPLUS ETFs LINEUP.
- PortfolioPlus S&P 500® ETF (PPLC)
- PortfolioPlus S&P® Mid Cap ETF (PPMC)
- PortfolioPlus S&P® Small Cap ETF (PPSC)
- PortfolioPlus Developed Markets ETF (PPDM)
- PortfolioPlus Emerging Markets ETF (PPEM)
- PortfolioPlus Total Bond Market ETF (PPTB)
MAGNIFIED RETURNS MAY BE POSITIVE OR NEGATIVE. PortfolioPlus ETFs seek returns that are 125% the return of their benchmark indexes for a single day. The funds should not be expected to provide 1.25 times the return of their benchmarks’ cumulative return for periods greater than a day. Depending upon the path of the index over longer periods, compounding may have a positive or negative impact on the returns of leveraged funds. Compounding affects all investments, but has more impact on leveraged funds. Due to periods of negative compounding caused by index volatility, a fund’s return may be negative in the same period that its index’s return is flat or positive. PortfolioPlus ETFs are intended to be used by investors who understand leverage risk and the effects of compounding, and intend to monitor their portfolios.
COMPETITION GROWS AS MARGINS SHRINK.
As an advisor, you work hard every day to set yourself apart from your peers in a way that helps build your business. But over the last decade, increased correlation among asset classes, the inability to outperform passive index investing, and downward pressure on fees even as overhead costs rise; all put pressure on you to add cost-effective value for your clients, while defending your margin.
For your clients, the main goal is to grow their assets while taking on an acceptable level of risk. For decades, diversification has been the tried and true method for reaching your clients objectives. It’s no wonder, since effective asset allocation is the most fundamental investing principle because it helps investors seek maximum risk-adjusted returns, over the long run.
Portfolio diversification through broad asset allocation allows investors the opportunity to seek to maximize risk-adjusted returns over full market cycles.
How well you manage your clients’ assets against their individual risk profile over time, in the end may be your best weapon in setting yourself apart from other advisors.
Traditional diversified asset allocation models have served investors well for decades. What if there was a way to add just a little more exposure to those diversified portfolios over time? Now there is.
In general, advisors have relied upon actively and passively managed mutual funds and ETFs, to build different asset allocation models; we believe the PortfolioPlus ETFs can offer advantages over traditional investments for advisors seeking to outperform the market:
- Cost Effective. Actively managed funds offer access to the upside potential of the portfolio manager’s best ideas, but typically involve higher fees, which can hurt long term returns.
- Competitive Performance. Passive, traditional index tracking funds offer low-cost, broad market exposure, but by definition have no potential to outperform their benchmarks.
- Liquid Structure. The ETF structure offers daily liquidity and transparency compared to mutual funds, which trade at NAV and typically release holdings on a quarterly basis.
A LITTLE CAN GO A LONG WAY.
For decades sophisticated institutional investors have been managing portfolios with the use of derivatives to increase exposure to certain asset classes. Over time, just a small amount of increased exposure might make a difference.
PortfolioPlus ETFs are structured in a way to apply this institutional style strategy, in a simple, cost-effective manner. Consider the PortfolioPlus ETF lineup of funds to help your clients’ portfolios work harder for them.
The above numbers show the non-leveraged returns of the S&P 500 Index compared to the returns of the PortfolioPlus S&P 500® ETF on a daily basis for the period of 1/07/2015 through 12/31/2017. This example shows what an investor might have experienced if they invested in the ETF. For the most recent standardized performance and month-end performance, click here.
Performance is historical and does not guarantee future results. The investment return and principal value of an investment will fluctuate. An investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. For the most recent month-end performance please visit the funds’ website at www.portfolioplusetfs.com.
YOUR IDEAS. PLUS.
For long-term investors, portfolio diversification is key. Historically, a portfolio constructed of diversified investments provides for better risk adjusted returns and less volatility than any single investment found within the portfolio.
PortfolioPlus ETFs provide an additional daily exposure – just 25% – to broad-market indexes through the use of leverage. Funds that employ leverage tend to thrive most consistently in low volatility environments. If you’re successful at creating strategies that combat volatility, then PortfolioPlus ETFs may be just the right addition.
Whether you decide to invest in the funds in one or two asset classes or more holistically, the pairing of your best ideas, plus the added strength of PortfolioPlus ETFs, may be a great way to set yourself apart.
- Max Drawdown – The peak-to-trough decline during a specific record period of an investment, fund or commodity. A drawdown is usually
quoted as the percentage between the peak and the trough.
- Risk/return ratio – A statistic that measures the dispersion of a dataset relative to its mean and is calculated as the square root of the variance.
- Volatility – Historical volatility is based on historical prices and represents the degree of variability in the returns of an asset. This number is without a unit and expressed as a percentage.