This model seeks long-term total return and current income by investing in companies that pay dividends. PDA uses a quantitative process to identify those quality companies with a strong record of paying dividends and/or the ability to increase their dividend levels. History has shown that during volatile equity markets, portfolios consisting of quality dividend paying stocks have relatively more stability than the overall equity market.
This model seeks long-term total return and current income by investing in high paying asset class and sector ETFs. PDA uses a quantitative and fundamental process to identify the sectors and asset classes that pay above average dividends, and seeks exposure through the use of a diversified ETF strategy; with the goal of maximizing yield and minimizing risk. This strategy is designed to be strategic in nature with a tactical overlay that allows PDA to adjust sector and asset class weightings to accommodate for changing market conditions and portfolio yield. Its primary purpose is to provide income. Capital appreciation is secondary.
The Pure Fixed Income model seeks to create investment exposure consistent with the long-term risk and return attributes of the broader fixed income market. Broad diversification, low turnover, and minimum costs all contribute to the long-term benefits of the model. The PDA investment team uses its quantitative and qualitative process to add exposure to other fixed income asset classes such as High Yield and Emerging Market Bonds to maximize expected risk-adjusted returns.
The Pure International Equity model seeks to create investment exposure consistent with the long-term risk and return attributes of international developed and emerging market equities. Broad diversification, low turnover, and minimum costs all contribute to the long-term benefits of the model. The PDA investment team uses its quantitative and qualitative process to add exposure to other international asset classes such as Frontier Markets and International Small Caps to maximize expected risk-adjusted returns.
The PDA Pure U.S. Equity model seeks long-term capital appreciation through equity investments that the portfolio management team believes will provide higher returns than the S&P 500 Index. PDA uses a quantitative and qualitative process to identify companies with favorable valuations and positive growth rates.
The Absolute Return Model seeks to provide long-term growth of capital, regardless of market conditions, by investing in a combination of different asset classes and strategies. The model deploys fixed income, equity, and alternative asset classes that use hedging techniques to dampen overall exposure and volatility.This model is designed to have a strategic tone with a tactical overlay enabling it to adapt to changing market conditions and exploit market inefficiencies.
The PDA Index models offer investors an easy, low-cost way to gain exposure to stocks and bonds. The models invest in index exchange traded funds (ETFs) that represent broad barometers for world equities and U.S. taxable bonds. The allocations to the underlying index ETFs are strategic and are based on long-term risk-adjusted performance, as a result, allocation adjustments are infrequent. The advantages of strategic index investing are numerous including the following: tax efficient due to low turnover, low cost, and broad diversification. Given these advantages, investors may consider these models as a core holding in their portfolio.
There are 5 different models that comprise the PDA Index Allocation Models - Conservative, Moderately Conservative, Moderate, Moderately Aggressive, and Aggressive.
PDA's investment process starts by analyzing a mix of asset classes to maximize an expected return at a given risk level. After strategic asset class allocations are determined, the portfolio managers select underlying investments, based on numerous characteristics: (i) upside/downside capture ratios; (ii) risk-adjusted returns (alpha); (iii) expense ratios; and (iv) other data points.
Adjustments to the strategic allocations, as well as the underlying investments, will be made if the risk/ return assumptions for each asset class change, or if the characteristics of the underlying investments do not meet the specifications. Tactical allocations are made to protect capital when it is believed equity markets are poised for a significant long-term decline.
The typical Conservative ETF model invests about 40% in equities, 55% in fixed income, and 5% in cash ETFs. The model invests in approximately 10 ETFs.
The typical Moderate ETF model invests about 60% in equities, 35% in fixed income, and 5% in cash ETFs. The model invests in approximately 10 ETFs.
The typical Aggressive ETF model invests about 80% in equities, 15% in fixed income, and 5% in cash ETFs. The model invests in approximately 10 ETFs.
Different types of investments and/or investment strategies involve varying levels of risk and there can be no assurance that any specific investment or investment strategy will be suitable or profitable for a client's or prospective client's portfolio and may result in a loss of principal.
Foreign and international investments may be more volatile than domestic investments and may involve special risks, including currency exchange fluctuations, increased expenses differences in auditing and financial standards and political and economic uncertainties.
Investments that focus on specific sectors may invest in a limited number of companies or industries which can increase volatility and exposure to issues affecting that sector, such as commodity prices and fluctuating industry demands.
ETFs are subject to risks similar to those of stocks, such as market risk, and investors who have their funds invested in accordance with the portfolios may experience losses. Additionally, fixed income (bond) ETFs are subject to interest rate risk, which is the risk that debt securities in a portfolio will decline in value because of increases in market interest rates. Real estate ETFs are subject to the risk that real estate stocks will decline because of adverse market conditions for the real estate industry or declines in real property values.
There are risks involved with equity investing, including the risk of loss of principal. Equity investments are subject to market fluctuations. Small-company stocks as compared to large-company stocks entail additional risks and can have greater price fluctuations. Bonds are exposed to credit and interest rate risk (when rates rise, bond fund princes generally fall). Investments in lower rated ("junk") bonds have more risk due to the risk of default. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets.
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