It is our belief
that the best way to increase long-term returns
is to minimize losses.
Green Pastures Defensive Growth Models can be put to use as stand-alone investment portfolios.
They can also be used to complement Green Pastures All Weather Models, Buffered Investments, or your investment portfolio held elsewhere, so you can be in a position to benefit from whichever strategy is performing well at the moment.
The combination of reasonable risks and returns, with real peace of mind, is the ultimate investment portfolio, giving you the time and freedom to focus on life.
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By maintaining low volatility and, most importantly, minimizing draw downs (losses), the Defensive Growth Models help ease your anxiety so you can stick with an investment plan through bull and bear markets.
While we believe strategically and passively managed buy-and-hold investment strategies have their merits and a place in your investment portfolio, we also believe you should explore complementary dynamically managed investment strategies for your investment portfolio, such as Green Pastures Defensive Growth Models.
These two different approaches to investing help give you what you want - reasonable risks and returns along with peace of mind.
Since 1929, the S&P 500 Index has incurred 26 bear markets (at least a 20% market decline approximately every 4 years)… and the S&P 500 Index has lost more than 36% on average in bear markets.
We have found that investing exclusively in strategically and passively managed buy-and-hold investment portfolios during bear markets is simply too hard on most individuals, both from a financial perspective as well as from an emotional perspective, due to the severe losses they suffer during major market declines.
As an investor, the time required to sit through an extended bear market followed by the time required to recover from a major loss may not be an appealing prospect, nor a practical possibility for you, especially if you are nearing or in retirement. For example, the S&P 500 Index lost 52.56% during the 2007-2009 bear market and it took 5 years and 7 months (67 months) for the index to recover from its losses in 2013 (and that is without factoring in the impact of inflation).
As an investment advisor, we have never been willing to sit idly by and watch the market erase a client's hard earned savings.
By diversifying a portion of your overall investment portfolio into dynamically managed investment portfolios such as our Defensive Growth Models, you can help guide your overall investment portfolio during periods when your strategically and passively managed buy-and-hold investment portfolios wander off course, and vice-versa, reduce downside volatility and draw downs (losses) – and help keep your long-term goals based investment plan on track.
Unlike strategically and passively managed buy-and-hold investment strategies, our approach to managing investments within the Defensive Growth Models emphasizes three themes:
(1) dynamic management,
(2) strategy diversification, and
(3) minimizing draw downs (losses).
(1) Dynamic management: Green Pastures utilizes technical analysis to manage the Defensive Growth Models. The asset mix in each model is quantitatively shifted over time in response to changing market conditions.
Depending upon market conditions, the target equity allocation of each model may be in the market, out of the market, partly in and partly out of the market, and/or short the market.
(2) Strategy diversification: The Defensive Growth Models investment decisions are based on multiple stand-alone strategies: (1) Tactical Asset Allocation, (2) Sector Rotation and (3) Market Timing. The combination of these multiple market disciplines provides an opportunity for stability in diverse market conditions.
(3) Minimizing draw downs (losses): We make disciplined risk management a priority. Risks are every bit as important as returns and our goal is to participate in the majority of market advances while attempting to avoid the majority of major market declines.
In sports, there is a saying: "Offense wins games, but defense wins championships." We believe the same holds true when it comes to investing.
Click on the Chart 04 link below to review the Hypothetical Report Disclosure Statement that should be read in conjunction with the exhibits above.
Each Defensive Growth Model seeks to:
(1) provide capital appreciation and current income consistent with its target asset allocation,
(2) make money over complete bull and bear market cycles,
(3) minimize downside volatility and draw downs (losses),
(4) maintain a low correlation to major U.S. equity market indices during bear markets, and
(5) complement strategically and passively managed investment portfolios.
Artist: Amanda C. Herbert | www.essentiaequi.com
Is The Number One Reason Investors Abandon Their Strategies
And Fail To Achieve Their Long-Term Goals
The Best Offense Is A Great Defense
The most important part of the chart above highlights the WORST DRAW DOWN (loss) you would have experienced in each of the Strategic Models. The Depth measures the losing periods, from peak to trough. The Recovery Time measures the number of months that it took to recover from the losing periods (and that's without factoring in inflation).
For example, if you made a hypothetical investment of $1,000,000 in the S&P 500 Index (you cannot invest directly in an index) entering 2008, then:
(1) you would have lost 49.94% or $499,400 [(the Depth of the draw down (loss)] through February 2009, and your $1,000,0000 would have plummeted to $500,600, and
(2) your investment would not have recovered from its losses to reclaim the $1,000,000 level until 61 months later [(the Recovery Time from the draw down (loss)] in January 2013.
(3) You would have gone through all that financial and emotional stress to earn 0% on your $1,000,000 investment for five years and one month (and that's without factoring the impact of inflation).
Note: The S&P 500 Index actually lost 52.56% during the entire bear market that lasted from November 2007 through February 2009, and did not recover from its losses until 63 months later in January 2013.
On the flip side, if you were like so many other investors who lost confidence in their investments during the bear market and:
(1) you exhausted your risk capacity and/or risk tolerance pain thresholds after suffering severe draw downs (losses), and
(2) you sold out during the market’s fear-driven capitulation phase to significant new lows, then
(3) the next dilemma confronting you would have been at what point would you plan on re-entering the market - hopefully without missing out on too many gains when the market recovered from its losses.
While it is human nature to be tempted to search for and invest in opportunities with the highest potential returns, we highly recommend that you examine the WORST DRAW DOWNS (losses) when considering any potential investment opportunity.
A draw down analysis is useful because it highlights the potential losses you must be both willing, and able, to endure from a financial perspective, emotional perspective, and investment time horizon perspective - in order to stick with a plan - and reap potential long-term returns.
Upon comparison, you will see that the Green Pastures Defensive Growth Models - have significantly lower draw downs (losses) than the Strategic Models – with similar long-term returns.
Strategically and traditional passively managed investment portfolios have certain inherent limitations.
Due to the significant draw downs (losses) inherent in strategically and passively managed buy-and-hold investment portfolios during bear markets, an exclusive strategically and passively managed buy-and-hold investment portfolio simply may not be realistic for you if:
(1) you do not have the risk capacity (financial ability) to sustain such risks,
(2) you do not have the risk tolerance (emotional ability) to stomach such risks, and/or
(3) you do not have an unlimited investment time horizon to recover from severe bear market losses.
Chart 05 below illustrates summary performance results and risk/return statistics for several hypothetical S&P 500 Price Index and Bloomberg U.S. Aggregate Float Adjusted Bond Index Strategic Models ("Strategic Models"), made up of different combinations of equity and fixed income from 2008 through March 31, 2023, re-balanced annually (without a deduction for any assumed annual investment advisory fee).
The equity portion of each Strategic Model is represented by the S&P 500 Price Index which gives a broad look at the U.S. equities market and 500 companies' stock price performance. The fixed income portion is represented by the Bloomberg U.S. Aggregate Float Adjusted Bond Index which is the most common index used to track the performance of investment grade bonds in the U.S.
Various combinations of these two indices approximate traditional asset allocation investment portfolio options available within most investors’ retirement plans.
Each Strategic Model differs with respect to its asset allocation, upside performance potential and corresponding downside potential for risk.
The most important part of Chart 2 above highlights the WORST DRAW DOWN (loss) you would have experienced in each of the Defensive Growth Models. The Depth measures the losing periods, from peak to trough. The Recovery Time measures the number of months that it took to recover from the losing periods (and that's without factoring in inflation).
Upon comparison, you will see that the Green Pastures Defensive Growth Models (see Chart 2 above) - have significantly lower draw downs (losses) than the Strategic Models (see Chart 5 below) – with similar long-term returns.
> No-Load (and load-waived) Mutual Funds (Guggenheim Investments)
> Minimum Investment: $25,000
> Liquidity: Daily
> Transparency: Daily
> Management Fee: 1.00%
> Commissions: NONE
> Hidden Sales Charges: NONE
> Liquidation Penalties: NONE
Chart 02 below highlights summary performance results and risk/return statistics (Net of Fees) for the Green Pastures Defensive Growth Models through March 31, 2023.
The Green Pastures Defensive Growth Models consist of dynamically managed Defensive, S&P 500 Index and Fixed-Income no-load (and load-waived) mutual funds at Guggenheim Investments. Each model differs with respect to its asset allocation, upside performance potential and corresponding downside potential for risk.
We do all we can to achieve results you want with less volatility.
The draw down analysis is where we believe you will see the merits of Green Pastures' value added in comparison to strategically and traditional passively managed buy-and-hold investment strategies that have significantly higher draw downs (losses)… and emotional stress.
Click on the Chart 03.1-03.4 links below to review detail performance results and risk/return statistics (Net of Fees) for the Green Pastures Defensive Growth Models.
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