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Slide 1 of 30
A commitment to active risk management and a global pursuit of index-linked returns
across the asset spectrum underpins an investment philosophy that is the hallmark of
the Index Strategy Advisors advantage.
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Slide 2 of 30
1. Dynamic Asset Allocation Makes a Difference
Our disciplined approach helps to avoid
performance impairing volatility.
Our focus on asset allocation is dynamic and based on a
quantitative framework that continually analyzes the
unique catalysts and drivers of performance for each
investment sector. Given the general efficiency of the
capital markets, we exclude all stocks from investment
consideration. Our 100% index-focused approach
combines opportunistic tactical investing by identifying
index-linked asset classes, where relative over- and under-
valuation exist, with strategic and incremental investing in
sectors expected to outperform over longer periods of
time.
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Slide 3 of 30
1. Dynamic Asset Allocation Makes a Difference: ISA vs. Traditional Managers
Compare ISA to traditional investment manages to see how we're different.
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Slide 4 of 30
2. Rigorous Research
We are focused on furthering
understanding of the drivers of risk
and opportunity in the New Era of
investing.
The foundation of our research is a powerful
algorithm library. Our research methods are
at the forefront of technology, adaptive, and
based on the new realities of extremely
volatile and intricately interconnected global
financial markets.
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Slide 5 of 30
2. Rigorous Research
Global awareness is
critical to measure and
understand the true
scope of risk.
With the development in the
liberalization of capital
movements and the
securitization of stock markets,
international financial markets
have become increasingly
interdependent. ISA algorithms
perform surveillance on global
markets 24 hours a day, 7 days
per week.
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Slide 6 of 30
2. Rigorous Research
Global awareness is
critical to measure and
understand the true
scope of risk.
With the development in the
liberalization of capital
movements and the
securitization of stock markets,
international financial markets
have become increasingly
interdependent. ISA algorithms
perform surveillance on global
markets 24 hours a day, 7 days
per week.
© COPYRIGHT 2011 INDEX STRATEGY ADVISORS, INC. ALL RIGHTS RESERVED
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Slide 7 of 30
2. Rigorous Research
For the first time in over 70 years, 2000-2010 challenged investor expectations of
"normal returns.”
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Slide 8 of 30
2. Rigorous Research
For the first time in over 70 years, 2000-2010 challenged investor expectations of
"normal returns.”
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Slide 9 of 30
2. Rigorous Research
Relative to prior post-correction
rallies, the current recovery is robust.
Though immensely disruptive across all global
markets, the financial crisis has passed. In
capital market terms, the global markets have
recovered and shown tremendous resilience
compared to prior recession recoveries. ISA is
committed to identifying the sectors and
regions which will lead the recovery and
advance into the next decade. Compared with
prior recoveries, the current rebound ranks
among the strongest.
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Slide 10 of 30
2. Rigorous Research
Looking forward, experts disagree on
the range of potential returns.
The range of global stock market returns is
not obvious and underscores our focus on
analyzing the real drivers of opportunity
and risk. In the current post-crisis
environment, we believe that an
investment manager’s best strategy for
generating sustainable returns is to
manage client portfolios more actively and
switch between assets and asset classes
when necessary or opportune, according
to where the risks are lowest or the
potential returns most attractive.
© COPYRIGHT 2011 INDEX STRATEGY ADVISORS, INC. ALL RIGHTS RESERVED
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Slide 11 of 30
3. Global Diversification & Asset Allocation
ISA portfolios are constructed and managed
with carefully screened, index-linked ETF
securities.
Investment portfolios should be built around a strategic
and long-term approach. However, as markets fluctuate
and risks and opportunities emerge, sometimes
dramatically, it is prudent to account for them when
establishing an asset allocation policy. Through global
diversification and dynamic asset allocation, ISA
portfolios are designed to help investors navigate
significant, unstable movements in financial markets,
following a path to potentially increased returns, all
while managing risks through a disciplined process.
© COPYRIGHT 2011 INDEX STRATEGY ADVISORS, INC. ALL RIGHTS RESERVED
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Slide 12 of 30
3. Global Diversification & Asset Allocation
ISA monitors international
conditions where emerging markets
are playing a much larger role in the
global economy.
The developed markets generally have
greater exposure to emerging markets than
at anytime previously. We believe that a
longer-term consequence may be higher
volatility in investment portfolios, given that
emerging-market economies tend to be
more volatile than mature economies.
© COPYRIGHT 2011 INDEX STRATEGY ADVISORS, INC. ALL RIGHTS RESERVED
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Slide 13 of 30
3. Global Diversification & Asset Allocation
ISA monitors international
conditions where emerging markets
are playing a much larger role in the
global economy.
The developed markets generally have
greater exposure to emerging markets than
at anytime previously. We believe that a
longer-term consequence may be higher
volatility in investment portfolios, given that
emerging-market economies tend to be
more volatile than mature economies.
© COPYRIGHT 2011 INDEX STRATEGY ADVISORS, INC. ALL RIGHTS RESERVED
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Slide 14 of 30
3. Global Diversification & Asset Allocation
ISA monitors international
conditions where emerging markets
are playing a much larger role in the
global economy.
The developed markets generally have
greater exposure to emerging markets than
at anytime previously. We believe that a
longer-term consequence may be higher
volatility in investment portfolios, given that
emerging-market economies tend to be
more volatile than mature economies.
© COPYRIGHT 2011 INDEX STRATEGY ADVISORS, INC. ALL RIGHTS RESERVED
Expert investing advice. World-class investment research. FOR MORE INFORMATION PLEASE VISIT - WWW.INDEXSTRATEGYADVISORS.COM
CALL 1-800-984-0268 TO SPEAK WITH AN INVESTMENT ADVISOR
Slide 15 of 30
3. Global Diversification & Asset Allocation
ISA monitors international
conditions where emerging markets
are playing a much larger role in the
global economy.
The developed markets generally have
greater exposure to emerging markets than
at anytime previously. We believe that a
longer-term consequence may be higher
volatility in investment portfolios, given that
emerging-market economies tend to be
more volatile than mature economies.
© COPYRIGHT 2011 INDEX STRATEGY ADVISORS, INC. ALL RIGHTS RESERVED
Expert investing advice. World-class investment research. FOR MORE INFORMATION PLEASE VISIT - WWW.INDEXSTRATEGYADVISORS.COM
CALL 1-800-984-0268 TO SPEAK WITH AN INVESTMENT ADVISOR
Slide 16 of 30
4. A Disciplined Investment Process
The ISA investing process
integrates protection and growth
objectives.
The ISA investment process achieves growth and
protection and is built on a three step process:
Downside Risk Management, Portfolio
Optimization, and Compound Growth. The
achievement of these three areas of focus is
possible because of the integration of the
components within each objective: Capital
Preservation, Situational Logic, Multifactor Risk
Management, and Enhanced Return each blend
functionality with the larger objectives.
© COPYRIGHT 2011 INDEX STRATEGY ADVISORS, INC. ALL RIGHTS RESERVED
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CALL 1-800-984-0268 TO SPEAK WITH AN INVESTMENT ADVISOR
Slide 17 of 30
4. A Disciplined Investment Process: Downside Risk Management
Capital Preservation: A two-decade
pattern of low volatility has been
broken.
Today's markets, coupled with the economic
information within them, move faster than any
other time in history. These movements are both
volatile and correlated. Co-movements across
international economies and asset classes are
exacerbated by excess volatility, exposing
portfolio holdings to risk at greater levels than
ever before. Not only have the rules of investing
changed, but the tools necessary to manage an
investment portfolio have changed forever as
well.
© COPYRIGHT 2011 INDEX STRATEGY ADVISORS, INC. ALL RIGHTS RESERVED
Expert investing advice. World-class investment research. FOR MORE INFORMATION PLEASE VISIT - WWW.INDEXSTRATEGYADVISORS.COM
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Slide 18 of 30
4. A Disciplined Investment Process: Downside Risk Management
Capital Preservation: A two-decade
pattern of low volatility has been
broken.
Today's markets, coupled with the economic
information within them, move faster than any
other time in history. These movements are both
volatile and correlated. Co-movements across
international economies and asset classes are
exacerbated by excess volatility, exposing
portfolio holdings to risk at greater levels than
ever before. Not only have the rules of investing
changed, but the tools necessary to manage an
investment portfolio have changed forever as
well.
© COPYRIGHT 2011 INDEX STRATEGY ADVISORS, INC. ALL RIGHTS RESERVED
Expert investing advice. World-class investment research. FOR MORE INFORMATION PLEASE VISIT - WWW.INDEXSTRATEGYADVISORS.COM
CALL 1-800-984-0268 TO SPEAK WITH AN INVESTMENT ADVISOR
Slide 19 of 30
4. A Disciplined Investment Process: Downside Risk Management
Capital Preservation: A two-decade
pattern of low volatility has been
broken.
Today's markets, coupled with the economic
information within them, move faster than any
other time in history. These movements are both
volatile and correlated. Co-movements across
international economies and asset classes are
exacerbated by excess volatility, exposing
portfolio holdings to risk at greater levels than
ever before. Not only have the rules of investing
changed, but the tools necessary to manage an
investment portfolio have changed forever as
well.
© COPYRIGHT 2011 INDEX STRATEGY ADVISORS, INC. ALL RIGHTS RESERVED
Expert investing advice. World-class investment research. FOR MORE INFORMATION PLEASE VISIT - WWW.INDEXSTRATEGYADVISORS.COM
CALL 1-800-984-0268 TO SPEAK WITH AN INVESTMENT ADVISOR
Slide 20 of 30
4. A Disciplined Investment Process: Downside Risk Management
Capital Preservation: A two-decade
pattern of low volatility has been
broken.
Today's markets, coupled with the economic
information within them, move faster than any
other time in history. These movements are both
volatile and correlated. Co-movements across
international economies and asset classes are
exacerbated by excess volatility, exposing
portfolio holdings to risk at greater levels than
ever before. Not only have the rules of investing
changed, but the tools necessary to manage an
investment portfolio have changed forever as
well.
© COPYRIGHT 2011 INDEX STRATEGY ADVISORS, INC. ALL RIGHTS RESERVED
Expert investing advice. World-class investment research. FOR MORE INFORMATION PLEASE VISIT - WWW.INDEXSTRATEGYADVISORS.COM
CALL 1-800-984-0268 TO SPEAK WITH AN INVESTMENT ADVISOR
Slide 21 of 30
4. A Disciplined Investment Process: Downside Risk Management
Capital Preservation: The difficulty
of recovering losses makes capital
preservation a priority.
The timing of corrections, market shocks, price
dislocations, and other macro events may be
impossible to predict; but are persistent in their
recurrence. Such events reveal massive data, that
in our view, inform a statistically meaningful risk-
reward trade-off assessment in portfolio
allocations. We introduce a level of downside risk
management through dynamic asset allocation
based on these data, events and or specific
market conditions that reflect the optimal
risk/reward balance for the expected returns of
portfolio holdings.
© COPYRIGHT 2011 INDEX STRATEGY ADVISORS, INC. ALL RIGHTS RESERVED
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Slide 22 of 30
4. A Disciplined Investment Process: Downside Risk Management
ISA employs situational logic to inform a prudent response to market shocks.
Every market correction is unique, or unique enough that many investors are unprepared when the market
turns. We leverage historical risk factor interactions which translate to the present, and monitor the strongest
factor interactions within these pairings for objective confirmation of a downtrend. As our market assessment
improves or deteriorates, risk is reduced or assumed accordingly.
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Slide 23 of 30
4. A Disciplined Investment Process: Downside Risk Management
Situational Logic: ISA portfolios are managed for each client's needs and situation.
ISA algorithms locate information to determine how price trends may occur and the magnitude of their
consequences amid a constantly evolving investment environment; however, algorithms do not make
investment decisions. We integrate human temporal logic by intellectually exploring the full space of possible
outcomes for a given situation and sequence, fully considering the breadth of pitfalls or opportunities
inherent to the present environment and client situation.
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Slide 24 of 30
4. A Disciplined Investment Process: Downside Risk Management
Multifactor Risk Management: Macro risk
factor exposure by ISA portfolios reflect
multiple dimensions of risk.
Differences in market exposures to compensated risk
factors largely explain the returns between investors. By
applying multi-dimensional regression analysis, ISA
algorithms can analyze which market/macro asset classes
the portfolios are most exposed to (e.g. oil, commodities,
interest rates, currencies, other financial markets, industry
sectors, etc.) and weigh heaviest in influencing risk. Risk
factor analysis calculates the exposure to a provided set of
parameters, while risk factor screening finds the
parameters that best describe the portfolio
performance.
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Slide 25 of 30
4. A Disciplined Investment Process: Downside Risk Management
Beta Factoring: Keen awareness of co-movement
levels increases risk management effectiveness.
No investment program can predict or control the direction of the
markets. Achievement of outstanding returns is predicated on
what is within investors’ reach. Beta refers to an inherent sensitivity
to the Large Cap U.S. Equity Markets. Since equity market
movements are generally recognized to represent ‘beta’, beta
factoring describes the process for determining which securities
move in tandem with equities and to what degree a specified
investment may exceed the performance (or underperformance) of
a specific index (e.g. S&P 500). When powerful trends unfold,
selection of investments based on beta factor can provide
correlated, yet excess performance of a given benchmark.
Appraisal of beta and beta drift for all ISA investment candidates
serves as a measure of vulnerability to equity, volatility, and scoring
of the potential magnitude of expected returns. For this reason,
the vast new supply of sector, regional, and commodity ETFs have
enhanced return potential for ISA clients so excess market returns
and improved risk management are newly within reach.
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Slide 26 of 30
4. A Disciplined Investment Process: Downside Risk Management
ISA risk factors support real-time data-driven analysis.
To be useful, a risk model must be effective at identifying important interactions between risk factors. ISA risk
analyses calculate a set of traditional market risk measures on overall portfolios as well as drill down into asset
classes, security types, regions/countries, sectors, individual securities and the interactions among them. The
calculations involve advanced mathematical models that adapt to the current trading environment.
© COPYRIGHT 2011 INDEX STRATEGY ADVISORS, INC. ALL RIGHTS RESERVED
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Slide 27 of 30
4. A Disciplined Investment Process: Downside Risk Management
Efficient cost containment generates enhanced return.
ISA employs a two tiered trading structure to execute orders for client portfolios: Commission-Free Window Trading,
and Real-Time Market Trading with direct links to major trading venues.
Our most cost-effective trading method is a patented, commission-free window trading system. Our window trades are an innovative way to fill
orders efficiently for long term investors. Instead of being executed immediately, window trades are grouped together twice a day for
execution, matched internally when possible, and any remaining orders are then sent to the market. Our commission-free window trading
system saves our clients time and money with advantages that include:
• Ability to buy and sell an entire portfolio in a single transaction.
• Unlimited trades with no commissions, no transaction fees, and no ticket charges.
• The ease of placing orders in dollar amounts rather than shares.
• Capability of buying and selling whole or fractional shares.
Window Trading
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Slide 28 of 30
4. A Disciplined Investment Process: Downside Risk Management
Efficient cost containment generates enhanced return.
ISA employs a two tiered trading structure to execute orders for client portfolios: Commission-Free Window Trading,
and Real-Time Market Trading with direct links to major trading venues.
Real-Time Trading
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CALL 1-800-984-0268 TO SPEAK WITH AN INVESTMENT ADVISOR
Slide 29 of 30
4. A Disciplined Investment Process: Downside Risk Management
Unlike traditional investment strategies,
Global Macro returns depend mostly on
manager decisions.
Academic research and real world performance
results show that, in large and efficient markets,
the selection of individual stocks does not reliably
produce superior uncorrelated returns. For these
reasons, we do not attempt to select individual
stocks; instead, we utilize asset class allocation
strategies to construct and manage broadly
diversified index linked portfolios. This process is
also categorized as a global macro approach. Our
skill, augmented by our rigorous research, reflects
investment decisions that directly impact returns
for client portfolios.
© COPYRIGHT 2011 INDEX STRATEGY ADVISORS, INC. ALL RIGHTS RESERVED
Expert investing advice. World-class investment research. FOR MORE INFORMATION PLEASE VISIT - WWW.INDEXSTRATEGYADVISORS.COM
CALL 1-800-984-0268 TO SPEAK WITH AN INVESTMENT ADVISOR
Slide 30 of 30
To learn more about how our investment capabilities can
help you, please make an appointment by selecting:
TALK AN ADVISOR
at
www.indexstrategyadvisors.com
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