Worcester Business Journal Special Editions

28 2015 Economic Forecast www.wbjournal.com Worcester Business Journal Securities offered through LPL Financial member FINRA/SIPC. Advisory Services offered through Provo Wealth Management Group a Registered Investment Advisor. www.ProvoFinancial.com 385 South Street, Shrewsbury, MA 01545 508.842.0539 AND NOW 2014 THE NEW REALITY A Portfolio Built By Combining Both Traditional and Alternative Assets ALTERNATIVE INVESTMENTS ARE NOW AVAILABLE TO MANY INVESTORS THEN 1994 TRAdITIoNAL WIsdom of THE dAY A Portfolio Built By Using 60/40 Stocks and Bonds ALTERNATIVE INVESTMENTS WERE ONLY AVAILABLE, BACK THEN, TO THE ELITE. sTANdARd dEVIATIoN - HIsToRICAL VoLATILITY GAUGEs THE AmoUNT of EXPECTEd VoLATILITY oR RIsK. LoWER sTANdARd dEVIATIoN % = LoWER RIsK. Alternative Investments have been used by endowments successfully for years, † they are less correlated with traditional investments. This means they may perform differently from each other under the same market conditions and can provide further diversification, ‡ lower portfolio volatility, and potentially increase returns. *Based on the Sharpe ratio of a traditional portfolio of 60% equity/40% fixed income (.053) compared to a portfolio of 30% equity/40% fixed income/30% alternatives (0.77). The higher the Sharpe ratio—a calculation that uses standard deviation and excess return to determine reward per unit of risk—the better the portfolios' historical risk-adjusted return. † Source: From 6/30/2002-6/30/2012, an equal-weighted average of 506 University Endowments returned 6.2% compared to the S&P 500® Index average return of 5.3%. 2012 NACUBO Endowment Study, Annual Report of the National Association of College and University Business Officers of Endowment Performance and Management in Higher Education, 2013. The S&P 500 Index is unmanaged and not available for direct investment. Past performance is no guarantee of future results. ‡ Diversification does not assure a profit or protect against loss in a declining market. § Portfolio comparison from 12/31/1994 – 12/31/2013, and provided by Lipper, a Thompson Reuters Company. This chart is for illustrative purposes only and is not indicative of any investment. No assumptions should be made that similar asset allocations will be profitable, suitable, or perform as indicated above. Allocations and their percentages may change based on an individual investor's needs. The indices used to determine return and risk figures for the portfolio are as follows: Stocks=50%/32.5%/17.5%mix of S&P 500 Index, MSCI EAFE® Index, and Russell 2000® Index; Bonds=Barclays Aggregate Bond Index; and Alternatives=equal mix of Credit Suisse Global Macro Hedge Fund Index, Credit Suisse Long/Short Equity Hedge Fund Index, Credit Suisse Multi Strategy Hedge Fund Index, JP Morgan EMBI Global Diversified Index, Credit Suisse Event Driven Hedge Fund Index, Dow Jones® UBS Commodity Index, Credit Suisse Managed Futures Fund Index, and the FTSE EPRA/NAREIT Developed Index. The performance of the alternative allocation does not represent the actual performance of a portfolio or the current investment allocation of the portfolio. Indices are unmanaged and are not available for direct investment. Indices do not reflect fees and expenses associated with the active management of a portfolio. Portfolios that have a greater percentage of alternatives may have greater risks, especially those including arbitrage, currency, leveraging, and commodities. This additional risk can offset the benefit of diversification. Although asset allocation among different asset categories generally limits risk and exposure to any one category, the risk remains that management may favor an asset category that performs poorly relative to the other asset categories. The subaccounts expect to invest in positions that emphasize alternatives or nontraditional asset classes or investment strategies and, as a result, are subject to the risk factors of those asset classes. Some of those risks include general economic risk, geopolitical risk, commodity-price volatility, counterparty and settlement risk, currency risk, derivatives risk, emerging markets risk, foreign securities risk, high-yield bond exposure, noninvestment-grade bond exposure commonly known as "junk bonds," index investing risk, industry concentration risk, leveraging risk, market risk, prepayment risk, liquidity risk, real estate investment risk, sector risk, short sales risk, temporary defensive positions, and large cash positions. Not FDIC/NCUA insured • May lose value • Not bank/CU guaranteed • Not a deposit • Not insured by any federal agency B E S T O F B U SI N E S S Awards B E S T O F B U S I N E S S 2014 W o r c e s t e r B u sin ess J o u r n a l Provo Financial Services, Inc. voted Best of Business in Financial Planning/ Investment Services in central Massachusetts based on The Worcester Business Journal online polling. The Charts Below Illustrate the Potential of a Portfolio Built By Combining Both Traditional and Alternative Assets, which May Improve the Risk/Reward Characteristics of your Portfolio. Investment concepts designed to help improve your risk-adjusted returns.*

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