Utilizing Municipal Bond Exchange Traded Funds. Cardan Capital Partners Founding Partner Chief Investment Officer

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1 Utilizing Municipal Bond Exchange Traded Funds Presented by: Matthew A. Papazian, CFA Cardan Capital Partners Founding Partner Chief Investment Officer

2 Who We Are: $560MM AUM Denver Based RIA Formed November 6, 2015 $418MM in Discretionary Portfolios 78% ETF Based $56MM in Municipal ETF Portfolio 82% ETF Based

3 Why We Use Municipal ETFs: Low correlation to other asset classes Safe Low historical default rates Monthly Income vs. Semi-annual Allows us to efficiently express a view Allows access to parts of the market we would not otherwise access

4 Municipal Bonds Exhibit Low Correlation to Other Asset Classes

5 Municipal Bonds Have Very Low Default Rates Average ultimate recoveries on Moody s-rated municipal bonds (at about 64%) are higher than those on senior secured bonds of corporate issuers (53% on average over a similar time period). However, municipal recovery rates are highly variable across individual bonds, with some recovering 100 cents on the dollar while others receiving just 2 cents on the dollar. GO bonds experience higher recovery rates than non-go bonds during the study period.

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7 High yield municipals have low default rates and remain relatively uncorrelated during time of economic weakness

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9 How We Use Municipal ETFs: Core part of high net worth portfolio - reduced correlation to other portfolios can reduce overall volatility ETFs to adjust credit and duration exposures Why not Bonds or Mutual Funds? Bonds: Expensive transaction costs & shrinking bond inventory Mutual Funds: Cannot control actual fund exposure Manage the manager

10 Portfolio Strategies Lower Risk Moderate Risk Higher Risk Muni ETF Taxable Fixed Income All Weather Dynamic Moderate Core Moderate Equity Dividend Closed End Funds New Economy Core Equity Dynamic High Yield Equity

11 How We Build the Portfolio: Monitor spreads to determine value between investment grade and high yield municipals. Portfolio then positioned to overweight or underweight based on perceived value. Simultaneously maintain core position in MUB (ishares National Muni Bond ETF) and VTEB (Vanguard Tax-Exempt Bond ETF) to reduce portfolio volatility.

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13 Concept Behind the Portfolio Blend S&P Long/Intermediate Index Barclay's High Yield MuniIndex S&P Muni Bond /1/ /1/1999 4/1/ /1/2000 4/1/ /1/2001 4/1/ /1/2002 4/1/ /1/2003 4/1/ /1/2004 4/1/ /1/2005 4/1/ /1/2006 4/1/ /1/2007 4/1/ /1/2008 4/1/ /1/2009 4/1/ /1/2010 4/1/ /1/2011 4/1/ /1/2012 4/1/ /1/2013 4/1/ /1/2014 4/1/ /1/2015 4/1/2016

14 Current Portfolio Holdings and Statistics Allocation Symbol Name 16.74% HYD VanEck Vectors High-Yield Muni 4.99% SMB VanEck Vectors AMT-Free Short 11.70% ITM VanEck Vectors AMT-Free Interm 8.81% PZA PowerShares National AMT-Free 7.25% MUB ishares National Muni Bond ETF 9.00% MLN VanEck Vectors AMT-Free Long M 9.00% VTEB Vanguard Tax-Exempt Bond Index 9.00% EMOIX Eaton Vance Municipal Opportun 9.00% MAMTX BlackRock Municipal Series Tru 14.00% XMPT VanEck Vectors CEF Municipal I Current Yield: Current Duration: 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 2.97% Portfolio Yield 4.44% Tax Equivalent Yield (33% rate) 2.44% Agg Bond Yield Portfolio Duration 6.12 Agg Bond Duration

15 Market Risks Risk of Loss Investing involves risk, including the potential loss of principal, and all investors should be guided accordingly. The profitability of a significant portion of Cardan Capital Partners recommendations and/or investment decisions may depend to a great extent upon correctly assessing the future course of price movements of stocks, bonds and other asset classes. There can be no assurance that Cardan Capital Partners will be able to predict those price movements accurately or capitalize on any such assumptions. Mutual Funds and ETFs An investment in a mutual fund or exchange traded fund involves risk, including the loss of principal. Mutual fund and exchange traded fund shareholders are necessarily subject to the risks stemming from the individual issuers of the fund s underlying portfolio securities. Such shareholders are also liable for taxes on any fund-level capital gains, as mutual funds and exchange traded funds are required by law to distribute capital gains in the event they sell securities for a profit that cannot be offset by a corresponding loss. Shares of mutual funds are generally distributed and redeemed on an ongoing basis by the fund itself or a broker acting on its behalf. The trading price at which a share is transacted is equal to a fund s stated daily per share net asset value ( NAV ), plus any shareholders fees (e.g., sales loads, purchase fees, redemption fees). The per share NAV of a mutual fund is calculated at the end of each business day, although the actual NAV fluctuates with intraday changes to the market value of the fund s holdings. The trading prices of a mutual fund s shares may differ significantly from the NAV during periods of market volatility, which may, among other factors, lead to the mutual fund s shares trading at a premium or discount to actual NAV. Shares of exchange traded funds are listed on securities exchanges and transacted at negotiated prices in the secondary market. Generally, exchange traded fund shares trade at or near their most recent NAV, which is generally calculated at least once daily for indexed based exchange traded funds and potentially more frequently for actively managed exchange traded funds. However, certain inefficiencies may cause the shares to trade at a premium or discount to their pro rata NAV. There is also no guarantee that an active secondary market for such shares will develop or continue to exist. Generally, an exchange traded fund only redeems shares when aggregated as creation units (usually 20,000 shares or more). Therefore, if a liquid secondary market ceases to exist for shares of a particular exchange traded fund, a shareholder may have no way to dispose of such shares.

16 This presentation contains confidential and proprietary information of Cardan Capital Partners and is intended for the exclusive use of the person to whom it is being provided. It may not be modified, sold, or otherwise provided in whole or in part to any other person or entity without the prior permission from Cardan Capital. Strategies and investment programs described in this presentation are provided for the educational purposes only and are not necessarily indicative of securities offered for sale or private placement offerings available to any investor. Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended and/or undertaken by Cardan Capital Partners) will be profitable. Due to various factors, including changing market conditions and/or applicable laws, content may no longer be reflective of current opinions or positions. This document does not constitute an offer of securities for sale, or solicitation of an offer to purchase a security. Please remember that it remains your responsibility to advise, Cardan Capital Partners, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. This report may contain information that is privileged, confidential and exempt from disclosure under applicable law. If you are not the intended recipient (or the agent or employee responsible to deliver it to the intended recipient), you are hereby notified that any disclosure, dissemination, distribution or copying of this communication is strictly prohibited. If you received this in error, please notify the sender immediately and destroy this along with any attachments from your system. Cardan Capital Partners 100 Saint Paul Street Suite 640 Denver, Colorado Tel: Fax: