AFAM CAPITAL. Let s hit the road together.

Transcription

1

2 AFAM CAPITAL Where you find yourself today is a result of your hard work and wise choices. The road you took to get here may vary from the road you take moving forward. Wherever you are on the risk spectrum, AFAM Capital works to provide the most effective route for you to arrive successfully at your destination. AFAM Capital offers over 35 years of proven experience balancing the windy, rocky paths of investing. Developing customized solutions to meet your unique investment goals is what we do best. With more than $3 billon in assets under management and advisement, you can trust AFAM s guidance to help you chart your course. Let s hit the road together.

3 WHO WE ARE Mission // To be the most respected, ethical, sophisticated, client-focused boutique asset management firm in the United States. Vision // To provide the highest quality wealth management solutions and deliver superior risk-adjusted returns for our clients. AFAM Capital, Inc. is a rapidly growing asset manager specializing in the management of exchange-traded funds (ETFs) and equity portfolios. Our Al Frank division applies a disciplined buy and harvest long-term equity strategy based on selection, diversification and patience. Our Innealta division tactically shifts investments between ETFs of various asset classes with a strong emphasis on risk (e.g. variance of returns, downside market protection).

4 Providing you with customized portfolio management based on credible experience. USE OUR EXPERTISE TO HELP YOU GROW YOUR ASSETS. AFAM Capital continues the legacy of leadership begun by its founder Al Frank. Its team of experts are often interviewed on CNBC, Fox Business News, Bloomberg News, and other networks. Chief Executive Officer Jeff Montgomery is a periodic author in nationally-recognized publications such as Investment Advisor, and a frequent guest on national television and radio networks. The Al Frank division s Chief Investment Officer, John Buckingham, authors a blog on Forbes.com and edits top-ranked newsletter, The Prudent Speculator. The Innealta division s Chief Investment Officer, Dr. Gerald Buetow, is known for his quantitative, econometric framework model. As an AFAM Capital client, you will receive direct access to the decision-makers on our Al Frank Investment Committee, as well as a complimentary subscription to The Prudent Speculator and its related commentary, the byproduct of all of the work the Al Frank Investment Committee undertakes in researching stocks, constructing portfolios, and monitoring the markets. The Prudent Speculator includes: Close-up observations regarding current market activity Timely stock research, analysis, and commentary Graphic detail on the Al Frank investment strategy Extensive market commentary s, sent weekly Access to special reports and white papers

5 AFAM Capital, Inc. PRIVATE CLIENT SOLUTIONS Select Value Value-Oriented Select Dividend Dividend Focused Dynamic Portfolio Series Tactically Managed Risk-Based Core ETF Strategies Tactically Managed Country & Sector ETF Rotators Tactically Managed Fixed Income ETF Strategy Tactically Managed Tactically managed portfolio of fixed income ETFs all along the risk curve. Seeks growth and income. Employs a quantitative framework based on economic, fundamental, risk and technical analyses that evaluate the risk/ reward potential of investing in equity asset classes relative to fixed income ETFs. All-cap, value-oriented, strategy utilizing domestic equities and American Depository Receipts (ADRs). Tactically adjusts various ETF exposures based on a proprietary, quantitative econometric framework. A blend of Al Frank Select Value, Innealta Country Rotation and Tactical Fixed Income strategies. Equities and ETFs. All-cap dividend-focused strategy utilizing domestic equities and American Depository Receipts (ADRs). There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.

6 AL FRANK ASSET MANAGEMENT HISTORY, LEADERS, PHILOSOPHY Founder Al Frank first learned the value of a good bargain by necessity in his personal life. Later, his frugal approach became his most effective financial strategy as he found that undervalued stocks tend to outperform. He watched his portfolio grow, and as word of his success grew, family and friends started following his insight. Frank launched the firm in 1977 and began publishing his thoughts on the market as well as individual stock picks in a newsletter, The Prudent Speculator (TPS). Not long after, the Hulbert Financial Digest began to track the newsletter s performance and its influence grew. Now, a few decades and 10,000 subscribers later, TPS still ranks at the top for long-term total-return performance. When John Buckingham joined the firm in 1987, a stronger, more strategic approach to portfolio management followed. By leveraging advances in technology, momentum continues today. Salient success has been achieved through distinct discipline. Buying large baskets of undervalued stocks for their long-term appreciation remains the core strategy. Members of the Al Frank Investmest Committee: John Buckingham // Chief Investment Officer John Buckingham leads a team scrutinizing hundreds of stocks for money management clients, manages proprietary mutual funds and edits The Prudent Speculator. One of AFAM s largest shareholders, he joined the company in 1987 after graduating magna cum laude from University of Southern California with degrees in computer science and business administration. Buckingham is sought as a frequent contributor in broadcast, print and online media, as well as at speaking engagements and seminars. Jason R. Clark // Vice President, Senior Portfolio Manager, CFA Jason Clark has conducted research and portfolio management for AFAM since After serving in the United States Navy, Clark graduated summa cum laude with a bachelor or arts degree in finance from University of West Florida. His background includes experience as a fixed income specialist and corporate bond trader for Edward Jones and an equity research associate with A.G. Edwards. Clark is a CFA Charterholder and a member of the CFA Society of Orange County. Mark Mowrey // Senior Vice President, Portfolio Manager, CFA

7 AL FRANK INVESTMENT PHILOSOPHY: PATIENCE Al Frank Asset Management seeks those stocks we believe are currently priced at a discount and yet still hold value. Our confidence that the true value of investments should come to fruition in the fullness of time drives our approach to selection and diversification. As a result, patience comes easily. And patience, in turn, enables us to have a lower turnover of holdings, helping to minimize trading costs and improve tax efficiency for our clients. As an all cap value manager, the firm s go anywhere approach uncovers bargain-priced stocks independent of market capitalization, seeking broad diversification across sectors, industries, and companies. Al Frank specifically seeks long-term growth of capital through out-of-favor stocks that are trading for low multiples of earnings, sales, and/or book value. As we believe that growth is a component of value, we strive to find inexpensive stocks in industries with above-average growth prospects. Generally, we favor undervalued dividend payers due to their income streams, return expectations and potential risk mitigation characteristics. Investment Style // All cap value Objective // Long-term capital growth Some might also call it common-sense investing. If you can buy something on sale, generally speaking, you re better off than if you overpay for it.

8 INNEALTA CAPITAL HISTORY, LEADERS, PHILOSOPHY In November 2009, AFAM Capital acquired Innealta Portfolio Advisors, LLC from Dr. Gerald Buetow and renamed it Innealta Capital, now a wholly-owned division of AFAM. The acquisition of Innealta allowed AFAM to expand its product offerings to its clients, providing portfolios of exchange-traded funds (ETFs) to complement its Al Frank value equity strategies. Innealta s investment solutions range from pure fixed income, to equity rotation, to whole-portfolio multi-asset class portfolios. Though each of the portfolios and the strategies that define them are unique in design, all are rooted in the firm s broader goal of achieving optimal risk-relative returns over longer-term investment horizons. Members of the Innealta Investment Committee: Gerald Buetow // Chief Investment Officer, PhD, CFA Gerald Buetow is founder of BFRC Services, LLC and Innealta Portfolio Advisors, LLC quantitative consulting and advisory firms located in Charlottesville, VA. His previous experience includes: Chief Investment Officer of XTF GAM, LLC, Senior Portfolio Manager/Managing Director at Portfolio Management Consultants and Director of Research and Product Development at Atlantic Asset Management, LLC.; Vice President of Curriculum Development for the Association for Investment Management and Research (AIMR); Wheat First Professor of Finance and Director of the Quantitative Finance program at James Madison University; and Prudential Investment s Quantitative Investment Management Group. Dr. Buetow frequently publishes articles in academic and practitioner journals and recently completed two books. Dr. Buetow earned a bachelor of science in electrical engineering and a PhD in finance and econometrics from Lehigh University, as well as a master of science in Finance from the University of Texas - Dallas and holds the Chartered Financial Analyst designation. While in the Navy, Dr. Buetow was a Nuclear Engineering officer. Brian Henderson // Senior Research Analyst, PhD, CFA

9 INNEALTA INVESTMENT PHILOSOPHY: All of Innealta s portfolios are constructed using exchange traded funds (ETFs). By harnessing the benefits of ETFs, Innealta is able to provide investors with exposure to multiple asset classes and investment styles in highly liquid, low-cost portfolios. Innealta s distinct competitive advantage is the effectiveness of its proprietary quantitative models and its ability to execute investment strategies that seek to optimize the risk-reward trade-offs within and among a range of broad asset classes. At the core is a philosophy that always reviews prospective return in the context of relevant risks. For many investers, the value of a dollar preserved during a market downturn is worth more to them than the value of a dollar made during a market upturn.

10 DYNAMIC PORTFOLIO SERIES A SMOOTHER RIDE Whether you prefer driving on a highway or taking the back roads, we have options that will lead to your ideal destination. If you are an investor who sees merit in both the Al Frank value philosophy as well as the Innealta approach, we invite you to take advantage of them both. The Dynamic Portfolio Series (DPS) is our unique, hybrid solution utilizing strategies from both divisions. It s about what YOU want Blending the two independent schools of thought from Al Frank and Innealta, DPS allows us to pursue upside participation in favorable market environments with downside protection in times of market uncertainty. This is precisely what we believe is critical in meeting long-term risk and return objectives in volatile times. A MESSAGE FROM ERIC HARE, CHIEF OPERATING OFFICER At AFAM Capital, we consider managing our clients assets an honor. Our goal is to make the process of doing business with us as seamless as possible. The members of our operations team are available every step of the way as we partner with you to establish and maintain the accounts we manage. First, our business development team meets with potential clients to discuss their current financial situation, time horizon, risk tolerance and investment objectives. When introducing our strategies, we assess if the relationship will be a good fit. Then, our dedicated operations specialists assist by providing required documentation and serving as a liaison with either of our preferred custodians, Fidelity Investments or Charles Schwab. Throughout the process, we are committed to full transparency, clear and frequent communication, and dedicated focus on the client. We remain vigilant to that approach for all of our clients, new and tenured. We look forward to working with you. BEST REGARDS, Eric R. Hare Chief Operating Officer AFAM Capital

11 DISCLOSURES The information contained herein is created and maintained by AFAM Capital, Inc. AFAM Capital, Inc. is an independent, registered investment adviser, wholly owned by AF Holdings, Inc. AFAM is editor of The Prudent Speculator newsletter and is the investment adviser to certain no-load proprietary mutual funds and individually managed client accounts. Reg istration of an investment adviser does not imply any certain level of skill or training. For information on AFAM s assets under management, please contact us at either or info@afamcapital.com. Actual investment management fees will vary, ranging from.75% to 1.5% per annum depend ing on the amount we manage and the strategy applied. Our full management fee schedule is described in more detail in Form ADV Part 2A, a copy of which is available on our website < or upon request. Policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request. AFAM maintains a complete list and description of composites, which is available upon request. Any investment is subject to risk. Exchange traded funds (ETFs) are subject to risks similar to those of stocks, such as market risk, and investors that have their funds invest in accordance with the portfolios may experience losses. Additionally, fixed income (bond) ETFs are subject to interest rate risk, which is the risk that debt securities in a portfolio will decline in value because of increases in market interest rates. Investments in foreign investments may incur greater risks than domestic investments. For more information on the risks associated with investments, please refer to AFAM Capital s Form ADV Part 2A. Past performance is not a guarantee of future results. Diversification does not protect against loss in declining markets. It is not possible to invest directly in an index. Please contact us at or info@afamcapital.com for current Hulbert Digest newsletter rankings, which include the number of newsletters per respective time period. A newsletter s Hulbert Financial Digest s Ranking is based on an average of its several portfolios in the event it recommends more than one (and includes portfolios that the letters have discontinued). Rating is not indicative of future performance and may not be representative of any one client s experience. For information regarding managed accounts, please call us toll free at or visit us at afamcapital.com FM 2244, Bldg. 3-#170 Austin, Texas p: f: afamcapital.com

12 AFAM CAPITAL FM 2244 Bldg 3 - #170 Austin, TX P: F: afamcapital.com