INDEPENDENT EVALUATIONS OF ENHANCED DYNAMIC® METHODOLOGY
Please note: Past performance is no assurance of future results.
The following performance discussions and samplings are provided by recognized independent industry research sources, or industry practitioners. Some of the reporting provided was prepared under the request of a specific joint client, or (in the case of the University of Chicago studies) at our request. These studies included active, independent domestic equity managers and or utilized independent index back testing.
Important notice: Results will vary from one client portfolio to the next client account based upon investment manager selection, index fund or ETF selection, timing of strategy implementation, risk tolerance, domestic equity markets and cycles, fees, expenses, and length of time invested. For that reason, Enhanced does not intend to provide GIPS or AIMR compliant performance results which would otherwise display the results of the methodology across all client accounts. All index based back tested results provided reflect the consistent application of our quantitative analysis, without the benefit of any micro and or macro analysis.
Our experience has demonstrated that an institutional equity portfolio prudently employing the Enhanced Dynamic® methodology should produce higher risk-adjusted returns than if the portfolio maintained static or fixed allocations.
Dynamic Enhanced Dynamic® allocation, both in live and back tested results utilizing the Enhanced Dynamic® methodology have demonstrated higher risk-adjusted returns than static asset allocation.
Each client portfolio will be individually directed based upon their specific documented investment goals and objectives’, utilizing a combination of separately managed accounts, and or index funds, ETF’s or comingled funds, as selected by the investment consultant or committee.
Due to the unique customization of each individual client portfolio, we are unable to provide historic composite results of our investment results. Each client portfolio is distinctly different, and we do not currently manage a co-mingled fund for our clients. Please refer to our Disclosures, copyright and patent statement above.
Audited Historic Performance Analysis:
The attached audited historical results study is a 10 year audited analysis of an institutional level retirement plan’s domestic equity portfolio results, using the Enhanced Dynamic® methodology with multiple independent investment managers exchange traded funds and index funds, which were selected based upon the clients individual specifications and our recommendations. The results displayed represent a doubling of the S&P 500 index, the Wilshire 5000 index and the Russell 3000 index over a 10 year study period, (from January 31, 1997 until December 31, 2006) which involved particularly volatile and historically significant domestic equity markets. The results shown are Net – Net – Net of all expenses in the management of the portfolio. The client portfolio consisted entirely of independent separately managed accounts for the first eight years of the assignment, and shifted to Exchange Traded Funds (ETF’s), which remain as the current investment vehicle of the portfolio, as of the date of the letter, 5-30-2010.
The investment goals and objectives were (and are) very prudent and appropriate for a qualified retirement plan; specifically, there were moderate weighting shifts, under the guidelines and implementation of the Enhanced Dynamic® methodology, without heavy concentrations in any single equity, sector, or equity style or manager, which it reflected by the reduced volatility and consistency of the alpha excess performance.
The selection of the investment managers, who were responsible for the day to day investment of their respective allocations, was implemented under industry best practices and accepted practices and standards prevailing at the time. The same standards applied with the selection of the ETF portfolios.
The University of Chicago, Graduate School of Business (GSB) Center for Research in Securities Pricing (CRSP) Letters of verification and validation were prepared and issued upon our request, of which the institution was compensated. Two letters were prepared by CRSP, 2000 and 2002. In 2005, we approached the U of C for an update of their prior analysis, and were informed that CRSP no longer provided verification and validation services unless they were prepared utilizing the University’s own index and securities evaluation platform (Compustat), which would not accommodate independent index providers such as Wilshire, Russell and S&P. Based upon their decision to discontinue the prior audit methodology, we determined it no longer feasible to have the verification & validation study prepared.
The original evaluation and analysis of the Enhanced Dynamic® methodology [which is now prepared by Clear Investment Consulting; (Ivory Day)] was initially a retained evaluation of the Enhanced Dynamic® methodology by a large, institutional level public retirement fund, and paid for by that fund. Clear Investment Consulting has volunteered to continue providing this same analysis, as they had previously, on an ongoing, best efforts basis.
The detailed report represents the professional work product of an institutional investment consulting firm, utilizing a returns based analysis. Although it is extremely detailed, and represents a very broad cross section of the investment marketplace, and the many quasi- competitors providing equity allocation services, Enhanced Dynamic® methodology is displayed to be very unique in the flexibility of the guidance, the flexibility of conflict- free investment vehicle selection, and as importantly the considerably higher risk adjusted returns both of actively managed equity portfolios as well as index based returns.