Importance of Global Asset Allocation & How to Generate Alpha using ETFs Program Description: Empirical evidences have shown that over 70 percent of the portfolio returns come from proper Global Asset Allocation; in contrast to only 10 percent returns come from security selection. Yet investors spend more than 80 to 90 percent of their time in searching the winning stocks. Why, mainly because they find asset allocation is boring and stock picking is sexy. Speaker firmly believe that successful investing is not about picking the next Apple or Face book, but to know what investors can control. The truth is, investors don t have much control over market direction as well as returns. But investors do have control over two things - risk and costs. Portfolio risk can be mitigated by having proper asset allocation and investors can reduce cost by investing in index funds like ETFs. Investing in a single security is fraught with very high risk and considering the fact that 80 percent of the active funds cannot beat the index and the winners are not consistent, investing in ETFs is perhaps the best game in the market. ETFs carry less risk than stocks and charge less fee than mutual funds. This one day program will show participants how to build their entire portfolio (comprising of equities, bonds, REITs and currencies) using US listed ETFs. More importantly, participants shall learn on live website version how to create an All Weather portfolio comprising of only three ETFs that performs well in all business cycles and generates absolute return. In addition, presenter shall show live website examples of various ETFs investment strategies like Risk On / Risk Off, Momentum and Trend indicators, Risk Parity and Core & Satellite etc, that would not only improve the absolute return of the portfolio but shall also reduce the maximum draw-down of the portfolio. As a participant in the CFA Institute Approved-Provider Program, CFA Singapore has determined that this event qualifies for 7 credit hours. If you are a CFA Institute member, CE credit for your attendance at this event will be automatically recorded in your CE diary. Please refer to next page for Course Information
Course Information Date: 4 April 2014 Time: 9:00 AM 5:00PM Venue: M Hotel Instructor: Pradeep Verma, CFA Who should attend? Course content: CEOs, CIOs, Strategists and Fund Managers Family Offices, High Net Worth investors, Private Bankers and Wealth Managers Investment Managers, Treasury Heads and Investment Analysts Challenges of 2014: - Inflation or Deflation? - Consequences of Fed tapering - Valuation and risk profile of different asset classes Importance of Asset Allocation: - Limitations of Modern Portfolio Theory (MPT) - Tactical Vs Strategic asset allocation - Benefits of 3 powers Diversification; Dollar Cost Averaging; Compounding Why ETFs and why are US listed ETFs superior to Singapore listed ETFs? - Singapore ETFs market is not only thinly traded (unattractive bid / offer spread) but is also highly concentrated in one asset class (over 80% in equities). In addition, top 3 ETFs (Gold, India and China) represent over 60% of the market turnover. - Singapore ETFs have higher expense ratio (0.70 to 0.80%) as compared to the US ETFs (0.20 to 0.50%). What are the drawbacks of leveraged ETFs and how investors can exploit them for their benefits? - Given the fact that most leveraged ETFs tend to under-perform their respective benchmarks (because of resetting), presentation will show on live website version as to how investors can generate alpha by going long benchmark and shorting the respective leverage ETF. Why are Commodities ETFs terrible? - As a result of the high roll yield cost ( contango effect), Commodities ETFs tend to underperform their respective benchmark. - It will be shown on live version how investors can generate alpha by shorting commodity ETF against the long position of the underlying benchmark How to use Risk On / Risk Off Strategy to generate alpha? - On live example it will be shown how investors can achieve superior risk-adjusted returns by simply investing in S&P 500 when 50 days simple moving average (SMA) line of relative strength ratio (S&P 500 / US 7 to 10 Yr Treasury) is above the 200 days moving average. Please refer to next page for Course Content
Course Content How to use Risk On / Risk Off Strategy to generate alpha? (Cont d) - Conversely, when the 50 days moving average goes below the 200 days moving average, investor should sell S&P 500 and use the proceeds to buy US 7 to 10 yr Treasury. - Last ten years back-tested results will show that in almost every asset class SMA-based timing strategies reduced draw-downs and volatility while maintaining or improving absolute returns. How to build Countries / Sectors / REITs / Global portfolios by investing 100% of the portfolio in the US listed ETFs? - It will be shown how investors can build their entire portfolio using the US listed ETFs investing in equities, bonds, REITs and currencies. How to employ Momentum indicators to generate superior risk-adjusted return? - By ranking ETFs based on their momentum score (wherein the weighted average of last one and three months returns of the ETF are blended with last one month volatility) and then investing in top ranked 3 ETFs one can obtain superior returns - Live version will show the 10 year back-tested results wherein the momentum indicators are applied to various portfolios and all these portfolios achieved higher Sharpe ratio than their benchmarks. By using Cash ETF indicators, how can investors reduce their portfolios draw-down? - Under this scenario the momentum score of the top 3 ranked ETFs has to be higher than the momentum score of the Cash ETF, otherwise the portfolio shall be invested in Cash ETF. For example, if the Cash ETF is ranked 2nd, the portfolio will invest 33% in top ranked ETF and the remaining 67% shall be invested in Cash ETF. - Live version will show that when momentum and Cash ETF indicators are applied simultaneously to various portfolios, investors can not only improve the Sharpe ratio but can also reduce the maximum draw-down of the portfolio. Risk Parity Portfolio - Website live version will show that portfolios Sharpe ratio can be enhanced by following a Risk Parity approach wherein weights to each ETF are assigned based on their respective risk. - This is achieved by overweighting low volatility ETF and underweighting those that exhibit high volatility. Core & Satellite Portfolio - Live version will show that maximum draw-down of the All Weather portfolio can be further reduced by following Core / Satellite approach, wherein 60% of the portfolio is invested in All Weather portfolio and the remaining 40% of the portfolio is invested in 2 top ranked ETFs of the Global Portfolio. Please refer to next page for Instructor s Bio
Instructor s Bio data Pradeep Verma has over twenty years investment experience of managing assets for banks, financial service, asset management, insurance and hedge funds. Over this period he held various senior positions in various jurisdictions including London, Luxembourg, Bahrain, Dubai, India and Singapore. Previously, while employed in Luxembourg, he set up an open architecture of Multi- Assets - Best in Class structure, managing discretionary mandates (over $ 750 million) investing in ETFs of various Pradeep Verma, CFA asset classes. Currently, he is running his own consultancy firm in Singapore that provides investment advisory services to high net worth clients. He also sits on the Boards of two London listed Real Estate Funds (non-executive Independent director) investing in European and Indian properties. In addition, he is managing a small hedge fund (Global Macro Absolute Return) investing in four asset classes (equities, bonds, commodities and currencies) using US listed ETFs. He holds CFA and CPA charters of USA and ACA from India. Please refer to next page for Registration Form
Registration Advanced reservation is required due to limited capacity For participation, please complete the fields below and email / fax back to CFA Singapore Please indicate membership ID to enjoy members' rate Alternatively, Reservation can be made via email Refund and Cancellation Policy: - All cancellation requests have to be made in writing and a processing fee of S$50.00 will apply. - Requests made 4 weeks before the workshop date will be charged at 10% of the course fee. - Requests made 2 weeks before the workshop date will be charged at 50% of the course fee. - No refund will be made for requests made 1 week before the workshop date. Name:Mr./Mrs./Ms./Dr./ Membership No.: Email: Tel: Fax: Company: Address: Postal Code: Food Preferences: None Halal Vegetarian Others (please specify): Payment Details I would like to attend: Please mark a tick in the relevant box: (Prices include GST) Importance of Global Asset Allocation & How to Generate Alpha using ETFs 4 April 2014 Registration Fee: Please Tick Membership type Early Bird Fees Standard Fees (include GST) (include GST) CFA Singapore * until 4 March 2014 S$ 700.00* S$ 900.00 Non Member * until 4 March 2014 S$ 900.00* S$ 1,100.00 Remarks (Bank, *Cheque No.): Amt Due: S$ *All cheques to be made payable to CFA Singapore' c/o 10 Shenton Way #13-02 MAS Building, Singapore 079117 Please charge to my credit card I, hereby authorize CFA Singapore to charge my credit card account for the amount $ SGD Credit Card (VISA/AMEX/MC): (Expiry: /20 ) Signature/ Date CFA Singapore (a member society of CFA Institute) 10 Shenton Way, MAS Building, #13-02, Singapore 079117 Phone: 6322 6215 Fax: 6323 7657 Email: events@cfasingapore.org