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PERFORMANCE DATA: ASSET ALLOCATION ACCOUNTS
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This portfolio invests exclusively in ETFs and mutual funds. No individual stocks are used. It is a complement to my stock portfolios and provides
significant exposure to foreign equities. In combination with the stock portfolios, this portfolio allows for proper diversification and a total
portfolio solution for most investors. It holds 8-11 ETFs and mutual funds. It may also hold alternative investments such as gold, commodities and
foreign currencies. Fixed income may also be used for defensive purposes or as a hedge to equity positions.
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Annual Compounded Growth (2004-2011)
(assuming a $100,000 portfolio)
| Naworski Investments: |
$187,102 |
| MSCI World Index: |
$114,701 |
| Difference: |
$72,401 |
Annualized Total Return (2004-2011)
| Naworski Investments: |
8.1% |
| MSCI World Index: |
1.7% |
Annualized Returns (rolling)
| 5 Years: |
4.9% |
| 3 Years: |
15.9% |
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Significant Out Performance:
| Return |
Average of Naworski Portfolios |
MSCI World Index |
| 2011 |
-1.8% |
-7.6% |
| 2010 |
15.4% |
9.6% |
| 2009 |
37.3% |
27.0% |
| 2008 |
-27.2% |
-40.7% |
| 2007 |
12.1% |
9.0% |
| 2006 |
15.5% |
20.1% |
| 2005 |
13.0% |
9.5% |
| 2004 |
12.9% |
11.1% |
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Past performance is no guarantee of future performance. There is a risk of loss of principal. All return figures include deduction of management
fees and stock commissions. Please read the important disclosures below.
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INVESTMENT PHILOSOPHY
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As with my stock selection techniques, I use methods that are fundamentally sound, but differ from others in important ways. For instance, many
investment advisors believe in asset allocation, that is, determining the proper mix of stocks, bonds, cash and other investments for their clients.
That approach is wise because different types of asset classes move differently and are affected by different things. But it isn't enough just to
spread funds across different asset classes. It's also critical to determine whether an asset class is overvalued and let that be a guide whether it
should be purchased.
I try to determine if a particular asset class, say U.S. small cap growth, is undervalued or not. I tend to emphasize those areas that are undervalued.
As undervalued classes become overvalued, funds will be shifted to areas that are undervalued. I will tailor a financial plan for each client depending
on whether the funds are for a retirement or taxable account and based on their investment goals and risk tolerances.
Many advisors simply buy a percentage of each asset class without making a determination as to whether it is a good buy. I use the valuation skills that
I have honed for stock selection in determining which mutual funds to buy for my clients. I analyze the stocks that the funds own and the sector
weightings in the fund. My knowledge of individual stocks helps me in selecting mutual funds. By applying my views on which stocks are undervalued, I can
determine which mutual funds are best for my clients.
Others often make a mistake by failing to abide by the "diversification" principle. There are many potential asset classes in the world that should at
least be considered when designing a portfolio for someone. Too many portfolios lack true world asset diversification. Having four U. S. large cap growth
funds in a portfolio, for example, is not proper diversification. Because the funds will likely own the same or similar stocks, you are not spreading
your bets in a way that avoids risk.
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DISCLOSURES
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1. Performance is shown after deduction of my management fees paid by the client or net of my fees. Performance shown includes payment of dividends
and income. Past performance is no guarantee of future results, and investing in securities may result in a loss of principal.
2. Accounts that begin the calendar year under the minimum amount required for that account style are not included in the aggregate composite return
until the first year in which they reach the minimum.
3. Only those accounts that were funded for the full calendar year may be counted for each year’s return calculations.
4. The returns were calculated on an asset weighted basis from 2001 to 2006. Subsequent years were calculated using average returns.
5. If an account is initially funded six months or sooner from the start of the calendar year it will not be included in the return calculations for
the upcoming year.
6. Accounts with an inflow or outflow during the calendar year were not included in the calculations for that year. Prior to 2007 accounts with an outflow or inflow of
more than 25% were not included in the calculations.
7. The volatility of the benchmark S & P 500 Index may be
materially different than the Stocks Taxable, Stocks NonTaxable or High
Dividend portfolios. The volatility of the benchmark MSCI World Index may
be materially different than the Asset Allocation portfolio.
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