EDWARD JONES ADVISORY SOLUTIONS Quarterly Update First Quarter 2018 www.edwardjoes.com Member SIPC
Key Steps to Fiacial Success We Use a Established Process 5 HOW CAN I STAY ON TRACK? 4 HOW DO I GET THERE? 1 WHERE AM I TODAY? MY FINANCIAL NEEDS 3 CAN I GET THERE? 2 WHERE WOULD I LIKE TO BE? To build persoalized strategies to help you achieve your goals
You Have Choices SELECT BROKERAGE (No-retiremet accouts BROKERAGE oly) RETIREMENT (No-retiremet accouts oly) (Retiremet accouts oly) SELECT MUTUAL FUND (Retiremet accouts oly) GUIDED SOLUTIONS ADVISORY SOLUTIONS Decisio-makig Hads-o Hads-o Hads-o Hads-o Delegated Adherece to Edward Joes Guidace Flexible Flexible Flexible Aliged Aliged Moitorig You ad your fiacial advisor You ad your fiacial advisor You ad your fiacial advisor You ad your fiacial advisor, with guardrails A team of research aalysts
The Value of Advisory Solutios Asset allocatio Ivestmet selectio Rebalacig
Why Diversify? Because Leaders Rotate. Worst Performace Best Performace 2011 2012 2013 2014 2015 2016 2017 10-year Retur 10-year Volatility 8.3% U.S. Bods 7.8% High-yield Bods 5.0% Iteratioal Bods 4.4% U.S. Large 2.1% Balaced toward Growth 0.4% Cash 0.1% -1.2% U.S. Mid -1.5% U.S. Small -4.2% Iteratioal Large -12.1% Iteratioal Small -15.9% Emergig Markets Stocks -18.4% Iteratioal Small 20.0% 19.7% Emergig Markets Stocks 18.2% Iteratioal Large 17.3% U.S. Mid 17.3% U.S. Small 16.3% U.S. Large 16.0% High-yield Bods 15.8% Balaced toward Growth 12.9% U.S. Bods 4.2% Iteratioal Bods 4.1% 0.1% Cash 0.1% U.S. Small 38.8% U.S. Mid 34.8% U.S. Large 32.4% Iteratioal Small 29.3% Iteratioal Large 22.8% High-yield Bods 7.4% Balaced toward Growth 16.0% 2.9% Cash 0.1% -1.2% U.S. Bods -2.0% Emergig Markets Stocks -2.6% Iteratioal Bods -3.1% 28.0% U.S. Large 13.7% U.S. Mid 13.2% Balaced toward Growth 6.5% U.S. Bods 6.0% U.S. Small 4.9% High-yield Bods 2.5% Cash 0.0% Emergig Markets Stocks -2.2% Iteratioal Bods -3.1% Iteratioal Large -4.9% Iteratioal Small -5.0% -33.1% Iteratioal Small 9.6% 2.8% U.S. Large 1.4% U.S. Bods 0.5% Cash 0.1% Balaced toward Growth -0.5% Iteratioal Large -0.8% U.S. Mid -2.4% U.S. Small -4.4% High-yield Bods -4.4% Iteratioal Bods -6.0% Emergig Markets Stocks -14.9% -32.9% U.S. Small 21.3% High-yield Bods 17.1% U.S. Mid 13.8% U.S. Large 12.0% 11.4% Emergig Markets Stocks 11.2% 8.6% Balaced toward Growth 7.9% U.S. Bods 2.7% Iteratioal Small 2.2% Iteratioal Bods 1.5% Iteratioal Large 1.0% Cash 0.4% Emergig Markets Stocks 37.3% Iteratioal Small 33.0% Iteratioal Large 25.0% U.S. Large 21.8% U.S. Mid 18.5% Balaced toward Growth 15.6% U.S. Small 14.7% Iteratioal Bods 10.5% 8.7% High-yield Bods 7.5% 5.8% U.S. Bods 3.5% Cash 0.9% U.S. Mid 9.1% U.S. Small 8.7% U.S. Large 8.5% High-yield Bods 8.1% 7.8% Balaced toward Growth 6.1% Iteratioal Small 5.8% U.S. Bods 4.0% Iteratioal Bods 2.4% Iteratioal Large 1.9% Emergig Markets Stocks 1.7% Cash 0.4% -10.2% 24.6% 23.1% Emergig Markets Stocks 22.8% U.S. Small 19.9% Iteratioal Small 19.6% Iteratioal Large 18.5% U.S. Mid 17.8% U.S. Large 15.1% Balaced toward Growth 11.3% High-yield Bods 10.5% Iteratioal Bods 8.3% U.S. Bods 3.2% Cash 0.2%
Why Diversify? Because Leaders Rotate. cotiued Iteratioal Bods represeted by the Barclays Global Aggregate Ex U.S. Idex. Emergig Markets Stocks represeted by the MSCI EM Idex. U.S. Bods represeted by the Barclays U.S. Aggregate Bod Idex. U.S. Small-cap Stocks represeted by the Russell 2000 Idex. High Yield Bods represeted by the Barclays U.S. HY 2% Issuer Cap Idex. U.S. Mid-cap Stocks represeted by the Russell Mid Cap Idex. Cash represeted by the Barclays U.S. Treasury Bellwethers 3Mo TR USD Idex. U.S. Large-cap Stocks represeted by the S&P 500 TR Idex. represeted by the S&P GSCI TR USD Idex. Iteratioal Small-cap Stocks represeted by the S&P Developed Ex US Small Idex. represeted by the FTSE NAREIT All Equity Idex. Iteratioal Large-cap Stocks represeted by the MSCI EAFE NR Idex. Balaced Toward Growth Portfolio Objective cosists of the followig: Barclays Global Aggregate Ex U.S. Idex (3%), Barclays U.S. Aggregate Bod Idex (25%), Barclays U.S. HY 2% Issuer Cap Idex (5%), Barclays U.S. Treasury Bellwethers 3Mo Idex (2%), FTSE NAREIT All Equity Idex (4%), MSCI EAFE Idex (13%), MSCI EM Idex (4%), Russell 2000 Idex (3%), Russell Mid Cap Idex (7%), S&P 500 Idex (30%),MSCI EAFE Small-cap Idex (3%), S&P GSCI Idex (1%). The portfolio show is a hypothetical illustratio. Ivestor performace will vary. Past performace does ot guaratee future results. A idex is umaaged ad is ot meat to depict a actual ivestmet. Performace does ot iclude paymet of ay expeses, fees or sales charges, which would lower the performace results. Returs iclude divided reivestmet. The prices of small-cap stocks are geerally more volatile tha those of large compay stocks. There are special risks iheret i iteratioal ivestig, icludig currecy fluctuatios ad political, social ad ecoomic risks. 10-year retur ad volatility figures are for the period 2007-2017. Source: Morigstar Direct, 12/31/2017. All performace data assumes reivestmet of divideds. Past performace is o guaratee of future results. Ivestmet idexes are umaaged ad are ot available for direct ivestmet.
Retur Expectatios The Importace of Selectig the Appropriate Portfolio Objective Less Potetial Retur More Potetial Retur Potetial Log-term Average Aual Returs for Differet Portfolio Objectives Based o Curret Market Assumptios Less Potetial Risk Balaced toward Icome 35% equity/65% fixed icome 4.5%-6.5% retur Icome Focus 20% equity/80% fixed icome 4%-6% retur Balaced Growth & Icome 50% equity/50% fixed icome 5%-7% retur Balaced toward Growth 65% equity/35% fixed icome 5.5%-7.5% retur Growth Focus 80% equity/20% fixed icome 6%-8% retur All-Equity Focus 100% equity/0% fixed icome 6.5%-8.5% retur More Potetial Risk Source: Edward Joes. These retur rages are based o the firm s log-term capital market assumptios ad are ot guarateed. I additio, retur rages icorporate our retur expectatios for both domestic ad iteratioal equities.
Ivestor Returs vs. Bechmarks over 20 Years 8% 7% 6% 7.2% Ivestor Retur Buy & Hold Bechmark 5% 4% 5.3% 4.6% 3% 2% 1% 0.4% 0% Equity Fixed Icome Source: Quatitative Aalysis of Ivestor Behavior, 2018, DALBAR, Ic. Aualized retur for the past 20 years edig 12/31/2017. The Equity bechmark is represeted by the S&P 500. The Fixed Icome Bechmark is represeted the Barclays Aggregate Bod Idex. Returs do ot subtract commissios or fees. This study was coducted by a idepedet third party, DALBAR, Ic. A research firm specializig i fiacial services, DALBAR is ot associated with Edward Joes. Idividuals caot ivest directly i ay idex. Past performace is o guaratee of future results.
Ivestmet Results Market ad Research Model Performace
Key Market Themes for First Quarter Improvig global ecoomic ad earigs growth Volatility s abrupt retur Realistic expectatios
First Quarter Asset Class Performace 5% 4% 3% 2% Fixed Icome Equities "Plus" Assets 1% 0% -1% -2% -3% -4% -5% U.S. Taxable Bods Muicipal Bods U.S. Highyield Bods Global Bods U.S. Large-cap Iteratioal Large-cap U.S. Mid-cap U.S. Small-cap Iteratioal Small-cap Emergig Markets Source: Morigstar Direct
Expectatios for Differet Portfolio Objectives Possible 1-year Retur Rages for Differet Portfolio Objectives 50% 40% 30% 20% 10% 0% -10% -20% High Low -30% Icome Focus Balaced toward Icome Balaced Growth & Icome Balaced toward Growth Growth Focus All Equity Focus Source: Edward Joes calculatios, September 2015. Rages for Percet Equity ad Percet Fixed Icome ad Cash are +/-5%. Expected rage of retur is +/- 2 stadard deviatios. There are o guaratees that these expected returs ca be met. These rages do ot factor i fees ad taxes which would lower your actual retur.
Diversified Portfolio Performace Trailig 1-Year Portfolio Objective Performace Core Research Models 16% 14% Before Fees Max. Fees 12% 10% 8% 6% 4% 2% 0% Icome Focus Balaced toward Icome Balaced Growth & Icome Balaced toward Growth Growth Focus All Equity Focus Research Model Composite Returs As of 3/31/18 Returs are preseted gross ad et of all fees.
Diversified Portfolio Performace Trailig 1-Year Portfolio Objective Performace Core Plus Research Models 16% 14% Before Fees Max. Fees 12% 10% 8% 6% 4% 2% 0% Icome Focus Balaced toward Icome Balaced Growth & Icome Balaced toward Growth Growth Focus All Equity Focus Research Model Composite Returs As of 3/31/18 Returs are preseted gross ad et of all fees.
Diversified Portfolio Performace Trailig 5-Year Portfolio Objective Performace Core Research Models 12% 10% Before Fees Max. Fees 8% 6% 4% 2% 0% Icome Focus Balaced toward Icome Balaced Growth & Icome Balaced toward Growth Growth Focus All Equity Focus Research Model Composite Returs As of 3/31/18 Returs are preseted gross ad et of all fees.
Diversified Portfolio Performace Trailig 5-Year Portfolio Objective Performace Core Plus Research Models 10% 8% Before Fees Max. Fees 6% 4% 2% 0% Icome Focus Balaced toward Icome Balaced Growth & Icome Balaced toward Growth Growth Focus All Equity Focus Research Model Composite Returs As of 3/31/18 Returs are preseted gross ad et of all fees.
Q1 Research Model Commetary Withi the first quarter, more equity-orieted portfolios outperformed fixed-icome-orieted portfolios, although both posted egative returs i the short term. I geeral, the Core Plus Research Models slightly outperformed the Core Research Models because of additioal exposure to emergig markets ad commodities.
The Value of Advisory Solutios Asset allocatio Ivestmet selectio Rebalacig
Ecoomic Outlook Moderately faster growth higher govermet spedig, job growth cotiues ad iterest rates remai relatively low Cotiued market volatility Headlies from Washigto, icludig geopolitical risks ad trade agreemets, as well as upredictable currecies, may drive cotiued volatility Overall, diversified portfolios will be better prepared i times of ucertaity.
Edward Joes Advisory Solutios Edward Joes is a dually registered broker-dealer ad ivestmet adviser. Edward Joes Advisory Solutios is a asset allocatio program that provides ivestmet advisory services. Depedig o a cliet s miimum ivestmet, a cliet ca select Fud Models, which ivest i affiliated mutual fuds (if available), uaffiliated mutual fuds ad exchage-traded fuds (ETFs), or UMA Models, which also iclude separately maaged allocatios (SMAs). Please review the applicable Edward Joes Advisory Solutios Brochure for more iformatio. May of the ivestmets i Advisory Solutios are offered by prospectus. You should cosider the ivestmet objective, risks, ad charges ad expeses carefully before ivestig. The prospectus cotais this ad other iformatio. Your Edward Joes fiacial advisor ca provide a prospectus, which you should read carefully before ivestig. Diversificatio does ot guaratee a profit or protect agaist loss. Edward Joes, its employees ad fiacial advisors caot provide tax or legal advice. Please cosult your attorey or qualified tax advisor regardig your situatio.