We have two global macro investment strategies: 1). Global Alpha and 2). Global Alpha Ultra.
The following two charts show the performance (after fees) of our two strategies since their inception in 2005.
The performance for our unleveraged Global Alpha ("PDAM GA") strategy is displayed on the following chart, and is compared to the S&P 500 Index, the Dow Jones / Credit Suisse Global Macro Index and the Barclay Global Macro Index.
1. Global Alpha Strategy (Unleveraged)
The performance for our leveraged Global Alpha Ultra ("PDAM GAU") strategy is displayed on the following chart.
2. Global Alpha Ultra Strategy (Leveraged no more than 2x)
Since our firm's inception in 2005, the investment returns for our two investment strategies through July, 2011 after all fees are 56.74% (8.13% annualized) for our Global Alpha strategy, and 75.66% (9.99% annualized) for our Global Alpha Ultra strategy.
By comparison, the S&P 500 has returned 3.04% annualized, and our comparative benchmark index, the Dow Jones / Credit Suisse Global Macro Index has returned 2.24% annualized.
Additionally, and perhaps just as important as the investment return raw numbers, we have put up these numbers with significantly lower volatility, or risk, levels than the S&P 500, testament to our balanced, strategic and tactical risk allocation investment models.
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GIPS Compliance. Please click on the "Information" Tab on our website, and go to the Client Letter section for our Global Investment Performance Standards (GIPS) firm-wide independent verification report and performance examination presentations for our Global Alpha and Global Alpha Ultra strategies by esteemed verification and examination firm Ashland Partners & Company LLP. We claim compliance with the Global Investment Performance Standards (GIPS) on a firm-wide basis, and both our firm and the performance of our investment strategies will continue to be verified and examined in future years.
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We believe our conservative, transparent strategies to be superior to other investment approaches in today's economic climate because of the following reasons:
1). Bank CD's and money market funds are yielding historically low rates of return < 1.0%;
2). Municipal Bonds, although they provide tax advantageous yields, may be risky today due to unprecedented fiscal issues with many municipalities. Additionally, many municipal bond issues are difficult to research and obtain for the average investor, particularly when initially offered at par value, and are often purchased by individuals in the secondary bond market at premium to par value, with large commissions often paid to brokers;
3). Corporate Bonds, in our opinion, are currently priced too high for their corresponding yield levels, and also may be difficult to obtain for the average investor. High yield bonds, although they yield higher coupons, are more risky and subject to dramatic price fluctuations depending on global credit markets. Today's higher price levels add to the risk; high yield bonds are also generally subject to larger price adjustments than corporate bonds in the secondary market due to lower overall liquidity levels. Again, large commissions may be paid to brokers;
4). Annuities provide fixed or variable payouts in the future, but these payouts are often paid from the investment amounts put down today. Additionally, insurance commissions are often cloaked, and can be unreasonably high;
5). Stocks recommended by brokers of larger firms are often products which provide the firm and/or the broker the most economic benefit. Also, large firms are limited to which products they may be able to recommend;
6). ETFs (exchange-traded funds) selected as part of your portfolio may be correlated with the overall stock market to a higher degree than necessary, and may have liquidity and pricing concerns, among several other risks which need to be mitigated.
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Our investing strategies offer the following benefits over these traditional investing options, particularly in today's investing climate:
1). Our statistical and financial models provide asset allocation mixes for your portfolio across stocks, bonds, commodities, currencies and real estate, globally. This helps diversify risk in your portfolio without compromising returns. Generally private hedge funds utilize this type of strategy, but we have brought this option to those who seek better returns through their own accounts. We are thus considered an Alternative Investment, which means we invest in all of the asset classes mentioned in a balanced, risk monitored manner;
2). Our clients have a choice of two investment strategies, one unleveraged and one leveraged by no more than 2x. The leveraged approach may provide higher returns, but with higher risk, and may be more desirable for those with years to go before retirement;
3). Both investment approaches use a combination of strategic (longer than one year) and tactical (less than one year) investing styles, which offers investment balance supported by our models, and means we do not actively trade your portfolio. Rather, we adjust your portfolio periodically according to our risk models, the added benefit being much lower trading commissions. We currently believe that global infrastructure, agriculture and commodities to be important to our strategic allocation mix. This enables us to dynamically adjust your portfolio's risk levels for better returns;
4). Our returns for both strategies have beaten our respective benchmarks since our firm's inception in 2005 with lower risk levels - see charts below;
5). Our competition, in the form of private hedge funds or mutual funds with similar global macro investment approaches charge much higher fees and offer limited transparency, As an example, a recently released mutual fund covered in the Wall Street Journal in March 2011 had a load fee of 5.75% plus a 2.0% annual fee, with performance below our performance.
6). We offer full transparency in real time, as all assets remain in your name, or your designated person or company, and are held with our custodian partner firms Charles Schwab, Inc. and Scottrade, Inc. You will receive monthly statements from Schwab or Scottrade, as well as our monthly performance reports.
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