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PAS Tactical IWMG Overview .pdf


Original filename: PAS - Tactical IWMG Overview.pdf
Author: Samuel Rozzi

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Income with Moderate Growth
Investment Overview
Total Equity Exposure: 10% of Portfolio
-We own equity for long-term growth potential and to protect investors’ purchasing
power against inflation.

International/Foreign Equity: 5% of Portfolio
-International exposure offers diversification into both developed and emerging markets,
which are often driven by different economic factors than the U.S. Emerging markets also
offer higher growth rates with substantially lower valuation multiples. Current valuations
in some emerging markets are near historic lows.
Individual Positions:
1. EKWAX—Wells Fargo Precious Metals
-This holding give you exposure to precious metals miners around the world. We are
bullish on gold and silver, in particular. We believe these are undervalued because of the
recent spike in the dollar and the introduction of negative interest rates around the world.
Precious metals have typically been a valuable diversification tool because they tend to
have negative correlation to equity markets.

US Equity: 5% of Portfolio
-Our U.S. equity positions are conservative, due to our view that the economy is slowing
and that valuation multiples are high, often a bad combination for long-term investment
returns. Our positioning is focused on a diversified manager with excellent downside
protection capabilities, and a sector fund that is less economically sensitive than the broader
market.
Individual Positions:
1. MLXIX–Catalyst MLP Infrastructure Fund Class I
-The fund seeks to achieve its investment objective by primarily investing in the
equity securities of the general partners of master limited partnerships ("MLPs") and the
parent companies of general partners of MLPs. This fund has a higher than normal risk but
we feel that the 11.09% 12-month yield more than justifies your risk. It is very hard to find
yield in this market so it helps provide income to our portfolio.

Income with Moderate Growth

Total Fixed Income Exposure: 41% of Portfolio
-We own fixed income products for interest income and capital preservation purposes.
Our portfolio consists of high credit quality holdings. Our risk lies more with changes in
interest rates than with the credit downgrades.
Individual Positions:
1. IEI—iShares 3-7 Year Treasury Bond
-This ETF invests in government treasury bonds with maturities ranging from three to
seven years. These treasury bonds are lower risk and provide solid income.
2. CRED—iShares Core U.S. Credit Bond
-This ultra low-cost ETF provides exposure to the broad U.S. credit market. It’s
portfolio contains investment grade corporate and noncorporate debt. This is a core bond
holding that provides income and capital preservation.
3. TLT– iShares 20+ Year Treasury Bond
-This low-cost ETF invests in treasury bonds with maturities greater than 20 years.
This is our most volatile fixed income holding, but it provides our bond portfolio with
increased income and a potential safe haven should market risks rise.
4. LQD—IShares iBoxx $ Investment Grade Corporate Bond
-This cheap ETF has a portfolio of investment grade corporate bonds. It has a
moderate credit risk and provides more yield than government bonds with the same
duration. It provides a good source of income.
5. MUB—iShares National AMT-Free Municipal Bond
-This low-cost ETF invests in federal tax free municipal bonds to provide income. This
ETF is used in larger accounts as those investors are likely to be in higher tax brackets.
6. VMBS—Vanguard Mortgage-Backed Securities ETF
-This ETF invests in mortgage-backed securities issued by U.S. government agencies,
such as Ginnie Mae, Freddie Mac, and Fannie Mae. This offers diversification within our
fixed income portfolio and offers solid income.

Income with Moderate Growth
Total Alternatives Exposure: 25% of Portfolio
-We own alternative holdings for downside protection, returns that are not correlated to
US equity markets through exposure to commodities, currencies, and foreign stock futures,
and for greater flexibility in volatile markets.
Individual Positions:
1. HFXIX—Catalyst Hedged Futures Strategy Fund Class I
-This fund uses financial derivatives such as equity index options to profit from volatility
in the S&P 500. This fund is attractive because it has low correlation, and sometimes
negative, to equity markets which offer the potential for provide downside protection.
2. VXX—iPath S&P 500 VIX ST Futures ETN
-The ETN trades short-term volatility instruments to profit from increases in S&P 500
option volatility. This fund is also used as a hedge against equity markets. It reduces our
overall risk and can increase returns in down markets.
3. LOTIX—LoCorr Market Trend Fund Class I
-This fund specializes in trading options. Most of the time, their options are positioned
bearish. This is used with our other alternatives to protect clients money and profit from
downturns.

Cash: 10% of Portfolio
-Our cash level is higher than normal because of the current uncertainty in the financial
markets. Our excess cash reserves provide the opportunity to finance new investment
opportunities, whenever they arise.


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