What's New
2013 Top 10 List
There are always risks inherent in the financial markets. In this report we analyze our Top 10 Financial Risks for 2013 and discuss the opportunities these risks create.
2013 Expiring Tax Cuts Memo
2013 Impact of Nov Elections on Economy
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Risk 3.0 Investing
Is your portfolio using the same old methods of risk management? The world has changed. If your approach to risk hasn't, now is the time.
Risk 3.0™ is a comprehensive portfolio solution designed to provide superior risk-adjusted returns by employing a Risk First™ investment process. Risk 3.0 proactively implements an array of innovative strategies optimized for different risk exposures as well as the new market realities of slow growth, continued volatility, and periodic crisis. The goal: Less overall risk and more consistent returns.
Update your investing to Risk 3.0. Contact MDE to learn how.
Risk 3.0 Rationale
The Risk 3.0 portfolio is designed to provide clients with superior risk-adjusted returns in the current challenging environment by...
- Preserving capital against small market losses
- Suffering minimal declines during moderate market losses
- Avoiding the majority of steep market losses
While also...
- Enhancing weak market gains
- Keeping pace with high single-digit market gains
- Participating, albeit at reduced levels, in double-digit market gains
Creating more stable returns and preserving capital is critical to increasing compound returns over time since the lower the portfolio loss in a declining market, the lower the recovery needed to restore lost value:
| Portfolio Loss | Recovery Needed to Restore Lost Value |
| -5% | 5.3% |
| -10% | 11.1% |
| -15% | 17.7% |
| -25% | 33.3% |
| -40% | 66.7% |
| -50% | 100% |
Core Portfolio Elements
A central theme of the Risk 3.0 portfolio is diversification across multiple risk exposures (e.g., market risk, credit risk, duration risk, currency risk, global macro risk, liquidity risk, etc). At the core of Risk 3.0 are MDE's Planned Return Strategy®, Accelerated Return Strategy™ and Third Rail Strategy™, and the Risk 3.0 portfolio is itself at the center of our holistic wealth management process.
Risk 3.0 Planned Return Strategy®
Planned Returns provides a combination of volatility buffers (to eliminate small-to-moderate losses) and return multipliers (to enhance weak-to-moderate gains) to give investors a higher level of built-in certainty:
| If the S&P 500 returns* | Planned Returns delivers** |
| +3% | +6% |
| +5% | +10% |
| +10% | +10% |
| +15% | +10% |
| -5% | 0% |
| -10% | 0% |
| -15% | -3% |
*Before dividends.
**Assuming a 10% cap, 12% downside protection, and a 2x return multiple. Returns are for a 12-month period after execution costs and before management fee which may be as high as 1.2%. Actual results depend on market conditions. Returns may vary depending on execution costs and other factors. Account performance will equal the value and time weighted average of individual tranches of investment purchased within each account and the performance of any placeholder which may also be held in the account. Investing involves risk, including potential loss of principal.
Risk 3.0 Accelerated Return Strategy™
Accelerated Return Strategy aims to enhance investor returns during rising markets without significantly increasing downside risk:
| If the S&P 500 returns* | Accelerated Return Strategy delivers** |
| +5% | +10% |
| +10% | +18% |
| +15% | +18% |
| +20% | +18% |
| -5% | -5% |
| -10% | -10% |
*Before dividends.
**Assuming an 18% cap, 0% downside protection, and a 2x return multiple. Returns are for a 12-month period after execution costs and before management fee which may be as high as 1.2%. Actual results depend on market conditions. Returns may vary depending on execution costs and other factors. Account performance will equal the value and time weighted average of individual tranches of investment purchased within each account and the performance of any placeholder which may also be held in the account. Investing involves risk, including potential loss of principal.
Risk 3.0 Third Rail Strategy™
Third Rail provides cost-effective protection against unpredictable market downside and extreme market shocks while still retaining attractive return potential:
| If the S&P 500 returns* | Third Rail delivers** |
| +5% | +5% |
| +10% | +10% |
| +15% | +15% |
| +20% | +15% |
| -10% | -10% |
| -20% | -15% |
| -30% | -15% |
| -40% | -15% |
*Before dividends.
**Assuming a 15% cap, downside protection between 15% and 40, and a 1x return multiple. Returns are for a 12-month period after execution costs and before management fee which may be as high as 1.2%. Actual results depend on market conditions. Returns may vary depending on execution costs and other factors. Account performance will equal the value and time weighted average of individual tranches of investment purchased within each account and the performance of any placeholder which may also be held in the account. Investing involves risk, including potential loss of principal.
For more information contact MDE.
