LIFETIME WEALTH PORTFOLIOS LIFETIME WEALTH PORTFOLIOS Investment Philosophy IBBOTSON ASSOCIATES
LIFETIME WEALTH PORTFOLIOS SM SUB-ADVISERS ARE PRE- SCREENED INVESTMENT EXPERTS PROVIDING MARKET INSIGHT, ANALYSIS TOOLS, AND ENGAGED PORTFOLIO MANAGEMENT. YOUR SUB-ADVISER CONSTRUCTS, MONITORS, AND MANAGES YOUR PORTFOLIO ACCORDING TO YOUR INVESTMENT STRATEGY. WHEN SELECTING YOUR LIFETIME WEALTH PORTFOLIOS SM SUB-ADVISER, CAREFULLY CONSIDER EACH SUB-ADVISER S UNIQUE INVESTMENT PHILOSOPHY. YOUR SUB-ADVISER S APPROACH TO CONSTRUCTING AND MANAGING A STRATEGY THAT ALIGNS WITH YOUR FINANCIAL OBJECTIVES IS KEY TO THE SUCCESS OF YOUR INVESTMENT PORTFOLIO. 01
This summary of Ibbotson Associates investment philosophy provides a snapshot of their approach to constructing and managing your investment portfolio. Here we answer the following questions: Who Is Ibbotson Associates? What s Their Investment Approach? How Will They Build My Portfolio? What Will My Team Look Like? How Will They Stay on Track? What Are My Next Steps? Who Is Ibbotson Associates? Ibbotson Associates was established in 1977, combining modern economic theory and practical application. Today, Ibbotson Associates is a Morningstar company and serves as a leading authority on asset allocation, market analysis, and portfolio management, providing products and services that help corporations and individuals invest, manage, and retain assets in order to help achieve financial success. Expertise, Insight, Innovation A leading specialist on finance and economics, Professor Roger G. Ibbotson the company s founder pioneered methodologies that use innovative data analysis tools to inform investment decisions and portfolio management. Ibbotson s theories and methodologies are used by public and private institutions throughout the world. Today, Roger is an adjunct consultant at Ibbotson. The Proof Is in the Numbers At the core of Ibbotson s approach is an innovative investment strategy rooted in Nobel Prize-winning economic principles. Utilizing a combination of intricate analysis tools to determine how investment managers have performed as well as how certain investments are expected to perform over time, Ibbotson s strategy integrates past performance and future expectations. Past performance is no guarantee of future results. Diversification does not assure a profit or protect against market loss. LIFETIME WEALTH PORTFOLIOS INVESTMENT PHILOSOPHY // IBBOTSON ASSOCIATES 02
Principles: What s Their Investment Approach? The question of how to maximize the market s potential in order to achieve financial goals is the cornerstone of a successful investment approach. In general, sub-advisers can approach investing in one of two ways: 1 2 The foundation of a successful investment strategy is an active approach. By analyzing and selecting investments, taking advantage of market opportunities that present themselves, and adjusting holdings based on their individual performance and overall market changes. The best strategy is a passive approach in which they analyze investments and select those that they think will perform well over time, disregarding the impulse to react to the market s short-term changes. While many sub-advisers follow either a passive approach or an active one, Ibbotson combines the two into a carefully balanced investment strategy that benefits from the individual strengths of each. They believe in using active management in asset classes in which they believe a portfolio manager may add additional value. For information-efficient asset classes, they use a passive style to keep portfolios on track, lower management expenses, and maximize investment returns. 03 LIFETIME WEALTH PORTFOLIOS INVESTMENT PHILOSOPHY // IBBOTSON ASSOCIATES
Construction: How Will They Build My Portfolio? Ibbotson uses a four-step process to select funds and construct your portfolio. By incorporating extensive research and market analysis, they re able to create model portfolios that are appropriate for a range of investment styles. DEVELOP Using historical data and analysis tools, Ibbotson forecasts how a set of investments is expected to perform over time to establish the asset mix for each model. MONITOR Ibbotson performs reviews of your portfolio and fund managers, making adjustments when necessary to ensure that your portfolio stays on track and on target. ANALYZE Ibbotson conducts a detailed comprehensive review of all investments considered for your portfolio, comparing each investment to its peers to put performance in proper context. CONSTRUCT Starting with the selected risk profile for each model, Ibbotson seeks to build portfolios that contain an optimal mix of active and passive investments. Management: What Will My Team Look Like? Your team is composed of a select group of top performing fund managers. Applying advanced investment analysis techniques, Ibbotson assesses each manager s historical performance and investment methodologies to align them with the approach needed for your investment strategy. Ibbotson validates your funds management teams against four key areas: 1 2 3 4 Trust: Monitor the stability of your management firm to ensure the safety of your investments. Compliance: Monitor and verify the funds operations to ensure they work in a professional and ethical manner. Qualifications: Provide a detailed analysis that verifies the breadth, depth, and experience of those entrusted with the responsibility of fund management. Proven Process: Consistent review of the firm s investment process ensures the continued strength of their approach. LIFETIME WEALTH PORTFOLIOS INVESTMENT PHILOSOPHY // IBBOTSON ASSOCIATES 04
The Benefit of Saving You Money One of the benefits of Ibbotson s approach is that because they incorporate passive investments into your portfolio models, the overall portfolio costs tend to be less expensive than those of an all-active portfolio. Additionally, many of the investments that make up the passive portion of the portfolios may include taxsaving benefits due to low turnover. Monitoring: How Will They Stay on Track? Ibbotson monitors the portfolio models they create to help ensure that they are in line with your investment objectives by performing periodic reviews of your investments and the fund managers. When appropriate, they consider changes to keep their portfolio models in line with expectations and defined objectives. Rebalancing and Reallocating To ensure that your portfolio remains consistent with your investment strategy, Ibbotson s review process detects changes in management or investment performance that could affect your portfolio s performance. When appropriate, they adjust your investments and redistribute them across your portfolio. Keeping It in Line As a Lifetime Wealth Portfolios SM sub-adviser, Ibbotson considers the value of your life insurance policy or income annuity in the overall construction of your portfolio to optimize your portfolio. As your insurance values change, Ibbotson makes adjustments to your portfolio to keep your portfolio aligned with your overall asset allocation. Protection and Guidance for Life As you move through the stages of your life, your needs and risk profile will likely change. The Lifetime Wealth Portfolios SM approach ensures that your portfolio continues to reflect your goals and individual needs. Your adviser is committed to reviewing your account with you once or more each year and recommending solutions to meet your protection needs and to maximize your portfolio s value over time. Get Started: What Are My Next Steps? Lifetime Wealth Portfolios SM is a proprietary managed account platform offered exclusively through Eagle Strategies LLC. Please contact your financial adviser for more information and to learn how Ibbotson Associates can help you achieve your financial goals. 05 LIFETIME WEALTH PORTFOLIOS INVESTMENT PHILOSOPHY // IBBOTSON ASSOCIATES
DEFINITIONS AND EXPLANATIONS ASSET CLASS An asset class defines a group of investments that are similar in nature. The three main asset classes are stocks, bonds, and cash or cash equivalents. ASSET ALLOCATION Asset allocation is a strategy that attempts to balance risk and reward by dividing an investor s total assets among several asset classes that will help them achieve their goals for their stated risk profile. ACTIVE MANAGEMENT This approach is an active, hands-on investment strategy in which investment managers build portfolios with individual securities that they believe will outperform their peers and they make adjustments based on changing market conditions. PORTFOLIO OPTIMIZATION A methodology used to construct portfolios that combine expert management, strategic allocation, and total economic worth to achieve the greatest possible return for a given risk profile. RISK-ADJUSTED RETURNS An investment concept that builds your portfolio in an attempt to achieve the greatest return for a specified risk tolerance. RISK TOLERANCE Risk tolerance refers to the degree of uncertainty an investor can handle regarding a negative change in the market. Risk tolerance is a combination of an investor s individual preference regarding risk as well as their age, income, and financial goals. PASSIVE MANAGEMENT Passive managers believe that it is difficult to consistently outperform benchmarks through individual investment selection and market timing. Instead, passively managed portfolios seek to emulate the holdings and returns of predetermined indices. Investors should refer to the investment management agreement as well as the Eagle Strategies Disclosure Brochure for complete information on the respective roles and responsibilities of Ibbotson Associates and Eagle Strategies LLC. Ibbotson Associates and Eagle Strategies LLC are registered investment advisers with the Securities and Exchange Commission and are not affiliated companies. 06
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