CLOSING COMMENTARY  

AAC has presented to you a combination of three well diversified investment management styles and methodologies, whose actual and back tested results have been able to achieve the following otherwise most contrary objectives and attributes.

Objectives/
Attributes
Combo 1
Combo 2
Combo 3
1. Ending periods below the T-Bill line:
(see Combination 1 Year Rolling Average Return Chart)
4
4
   
2. Percentage returns over 10%: (see Combination 1 Year Rolling Average Return Chart)
82%
82%
     
3. Positive returns during losing Market months: (see Combinations Negative Months Chart)
19.36%
- 0.95%
       
3b. Average annual positive returns during negative market months
11.06%
-.54%
 
4. Expected cumulative returns in excess of the Market: (see Combinations Cumulative Growth Chart)
110%
139%
       
4b. Average annual returns in excess of the market
22%
27.8%
 
5. Five largest drawdowns in excess of the Market: (see Drawdown Summaries)
(1.12%)
(4.06%)

While Combination 3 comes first in more attributes than the other two Combinations, because of the importance of attribute 3 and 5 to this client's conservative stance, we would choose Combination 1.

Combination 1:

  • Exceeds the 90-day T-Bill returns over every one of the 60 twelve month periods, save for four ending periods (April, July through September 1996).

  • Achieves rolling 12 month returns of 10 percent or more in 82 percent of the 60 ending periods.

  • Demonstrates a positive return of 25.43 percent during losing Market months, themselves totaling -78.07 percent (see Combination Growth Chart for dramatic confirmation of the effectivenes of the recent four month period).

  • Expected cumulative returns of 110 percent in excess of the Market are achieved over a 60 month period.

  • Averages five largest drawdowns at .13% less than that of the Market.

As can be seen from the above, the selection of Combination 1 over 2 or 3 in effect opts for the lowest of the three sets of expected returns. Having so stated, it is the client's responsibility to choose other alternatives, and we would welcome such direction.

We confess that our corporate orientation is in no small part influenced by our view of present Market conditions, and their projected future outcomes over the next few years.

If you wish to learn more about the AAC asset consulting approach, please click the contact us button.

 


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