The best offense is a great defense.

While we believe strategically managed investment strategies such as Green Pastures All Weather Models and traditional passively managed buy-and-hold investment 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.


We have found that investing exclusively in strategically and passively managed investment portfolios is simply too hard on most individuals, both from a financial perspective as well as from an emotional perspective, due to the devastation that bear markets inflict on these types of investment portfolios, as evidenced by the 2000-2002 and 2007-2009 bear markets.  As an investment advisor, we have never been willing to sit idly by and watch the market erase a client's hard earned savings.  And 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.


Diversifying a portion of your overall investment portfolio into dynamically managed investment portfolios such as our Defensive Growth Models can help guide your overall investment portfolio during periods when your strategically and passively managed investment portfolios wander off course - and help reduce downside volatility and drawdowns (losses). 


By complementing your strategically and passively managed investment portfolios with our dynamically managed Defensive Growth Models, these two very different approaches combine to help give you what you want - reasonable risks and returns along with peace of mind.

Each Defensive Growth Model utilizes a defensive growth dynamic asset allocation investment strategy, with a focus on risk management to mitigate downside risk, via a managed portfolio of Sector, Inverse Index, Fixed Income and Money Market no-load (and load-waived) mutual funds.


Unlike strategically and traditional passively managed buy-and-hold investment strategies, our approach to managing client investments within the Defensive Growth Models emphasizes three themes:

(1) dynamic management,

(2) strategy diversification, and

(3) minimizing drawdowns (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.  Our goal is to participate in the majority of market advances while attempting to avoid the majority of major market declines.


Strategically and traditional passively managed buy-and-hold investment strategies have no exit strategy during major bear markets - they remain fully invested regardless of market conditions - and consequently suffer severe losses during major market declines.  However, the Defensive Growth Models have an exit strategy during bear markets.  We make risk management a priority and attempt to avoid a significant portion of major market declines.  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 (with a limited portion of the target equity allocation).


(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 drawdowns (losses):  As an aftermath of the 2000-2002 and 2007-2009 bear markets, people are searching for less stomach-churning ways of investing.  Each Defensive Growth Model seeks to maintain low volatility and, most importantly, to minimize drawdowns (losses), relative to its target asset allocation, to ease high anxiety and help investors find a solution to stick with a long-term plan.  The bottom line: We aim to deliver gains with less pain.

Investment Strategy

Investment Objective

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 model differs with respect to its target asset allocation, upside performance potential and corresponding downside potential for risk.  We follow the same basic theme with each of the models - we do all we can to achieve the results you want - at the lowest possible level of volatility and risk.


Chart 01 below provides a general overview of the asset allocation of each Defensive Growth Model.

Target Asset Allocation


​​We Help You Keep Your Eyes On The Prize

"The goal of the Defensive Growth Models

is not to beat the market or any benchmarks.

The goal is to help you achieve your long-term financial objectives,

but most importantly, at a risk level you are comfortable with."

- Leeland Gray

In sports, there is a saying: "Offense wins games, but defense wins championships."  We believe the same holds true when it comes to investing.


The Green Pastures Defensive Growth Models were created to provide you with a combination of reasonable risks and returns, and help soften the pain of your strategically and passively managed investment portfolio's performance during major bear markets, so you have enough conviction to stick with an investment plan and harvest long-term wealth through bull and bear markets.

Click on the Exhibit B link below to review a related discussion on what to expect from the Green Pastures Defensive Growth Models during different market cycles.

Smoothing out the volatility and drawdowns (losses) creates more stable returns - more stable returns typically translates into lowering your stress level - and a lower stress level typically translates into producing better long-term investment results for you - because it makes it easier for you to stick with a plan, through good times and bad, and enjoy long-term success. 


By complementing your strategically and passively managed investment portfolios with the dynamically managed Defensive Growth Models, these very different approaches can combine to help give you what you want - reasonable risks and returns - and peace of mind.

Due to the significantly lower drawdowns (losses) of Green Pastures Defensive Growth Models, diversifying a portion of your investment portfolio into the program models may help guide your overall investment portfolio during periods when your strategically and passively managed portfolios wander off course - and vice-versa - and result in significantly lower volatility and drawdowns (losses) for your overall investment portfolio - and higher long-term returns.

The most important and useful part of the chart above is at the bottom of the chart - which highlights the two WORST DRAWDOWNS (losing periods) you would have experienced in each of the Strategic Models.  The Depth measures the losing periods, from peak to trough; and 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, let's assume hypothetically that you made a $1,000,000 investment in the S&P 500 Price Index (you cannot invest directly in an index) entering the 2007-2009 bear market that began in November 2007.  If you were able to remain confident in your investment, through good times and bad -  then your $1,000,000 investment would have lost 52.56% or $525,600 (the Depth) and dwindled to just $474,400 at its low point - and your investment would not have recovered from its losses to reclaim the $1,000,000 level until 63 months later (the Recovery Time) in January 2013.  You would have gone through all that financial and emotional stress to earn 0% on your $1,000,000 investment for five years and three months (and that's without factoring the impact of inflation).  On the flip side, if you were like so many other investors who lost confidence in their investments during the bear market - and you exhausted your risk capacity and/or risk tolerance pain thresholds after suffering severe drawdowns (losses) and sold your investment - then the next dilemma confronting you would have been at what point would you re-enter the market - hopefully without missing out on too many gains in the process.


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 DRAWDOWNS (losing periods) when considering any potential investment opportunity.  Keep in mind that similar drawdowns can occur at any time.  A drawdown 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 drawdowns (losses) than the Strategic Models with corresponding equity/fixed income portfolio allocations - and higher long-term returns.  While many investment managers believe that risk and return are directly related, and that you must be willing to take above-average risks to achieve above-average returns, it is our belief that the best way to increase long-term returns is to minimize losses.

Using The Green Pastures Defensive Growth Models To Complement Your Strategically And Traditional Passively Managed Investment Portfolios

The Limitations Of Strategically And Traditional Passively Managed Investment Portfolios

Rethinking Your Risk Attitude

The following information will provide you with more detailed nuts-and-bolts information as to why investing in Green Pastures Defensive Growth Models may, or may not, make sense for you:

>  The Limitations Of Strategically And Traditional Passively Managed Investment Portfolios

>  Using The Green Pastures Defensive Growth Models To Complement Your Strategically And Traditional Passively Managed Investment Portfolios

>  Rethinking Your Risk Attitude

>  The Four Stages Of A Market Cycle

>  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


Click on the Chart 03 link below to review detail performance results and risk/return statistics (Net of Fees) for the Green Pastures Defensive Growth Models.

Terms

Chart 02 below highlights summary performance results and risk/return statistics (Net of Fees) for the Green Pastures Defensive Growth Models through September 30, 2018.

Performance And Risk/Return Statistics

Investing is somewhat analogous to horseback riding - some folks like to mosey along - others folks like to gallop.


Each investor has different financial objectives that he or she is trying to achieve, as well as varying risk tolerance thresholds that he or she is both willing, and able, to endure in pursuit of those objectives.  Each investor also differs with respect to the level of volatility, and the potential for drawdowns (losses) that he or she is comfortable with, both from a financial perspective and an emotional perspective.  There is no one-size-fits-all investment portfolio.


To that end, the Green Pastures Defensive Growth Models offers five dynamically managed mutual fund account models for no-load (and load-waived) mutual funds, ranging from the more conservative to the more aggressive.

Artist: Amanda C. Herbert  |  www.essentiaequi.com

Five Dynamically Managed Mutual Fund Account Models

Investment success can seem simple when you're making money with little effort during bull markets.  However, while rising markets can be exhilarating, it is important to remember that the financial tide can turn swiftly and unexpectedly.


It is how well your investments perform through complete bull and bear market cycles that must be compared side-by-side in order to accurately assess their long-term value and, in addition, the merits of your investment advisor's value added.  We ask you to look at not just what portion of the rise we may capture on the upside with our investment management, but more importantly, what portion of the fall we may help protect you from on the downside.  This comparison is where we believe you will see  the real difference in our approach to investment management.



"... it is our belief

that the best way to increase long-term returns

is to minimize losses."

- Leeland Gray


Disciplined Risk Management

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 the more enjoyable aspects of life.

A Goals Based Investment Approach

We believe that risks are every bit as important as returns.  Risk management is about balancing the objectives of preservation and growth and it requires discipline.  Every investment decision we make managing the Defensive Growth Models is influenced by our belief in the necessity of risk management.  This means, in essence, that while we seek to provide you with the best long-term returns possible, our primary concern is in preserving your principal along the way. 


While many investment managers believe that risk and return are directly related, and that you must be willing to take on above-average risks to achieve above-average market returns, it is our belief that the best way to increase long-term returns is to minimize losses.


We help bridge the emotional gap between greed (your desire to generate investment returns) and fear (your aversion to taking on risk).

Strategically and traditional passively managed investment portfolios have certain inherent limitations.


While we believe the arguments supporting strategically and traditional passively managed investment portfolios have merit over the long-term, due to the significant drawdowns (losses) inherent in strategically and passively managed investment portfolios during bear markets, an exclusive strategically and passively managed investment portfolio simply may not be realistic for you over the short term 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.  For example, it took several years for strategically and passively managed investment portfolios to recover from the most recent 2007-2009 bear market (and that's without factoring in inflation).


Drawdowns (losses) can wreak havoc with you, both financially and emotionally, and cause the seemingly best made plans to go awry.  If your entire investment portfolio is left to depend solely on a strategically and passively managed investment portfolio, then its value is completely at the mercy of extreme market conditions.  Could you (Would you) willingly live through the carnage of another 2000-2002 or 2007-2009 type bear market all over again, and remain comfortably invested, as you watch your hard-earned investment portfolio dwindle by 20%, 30%, 40% or 50% of the assets that you had planned for, and counted on, to fund your retirement income and lifestyle needs?


While all equity investors face market risk, which concerns how market volatility causes investment returns to vary over time in comparison to long-term average market returns, retiree equity investors are confronted with an additional phenomenon known as sequence-of-returns risk - retiring before a bear market begins or during the early stages of a bear market.  The specific sequence of market returns matters significantly during the withdrawal phase of retirement, when the impact of drawdowns (losses) is especially magnified.  Losses, coupled with withdrawals, can deplete wealth rapidly, sending portfolio values spiraling downward, with relatively little left to benefit from a subsequent market recovery.


Millions of retirees' investment portfolios were devastated by sequence-of-returns risk when they retired before or during the early stages of the 2000-2002 and 2007-2009 bear markets, causing their retirement income and lifestyle plans to implode.


To highlight this discussion, Chart 05 below illustrates summary performance results and risk/return statistics for several hypothetical S&P 500 Price Index and Barclays U.S. Aggregate Bond Index Strategic Models ("Strategic Models").  These Strategic Models are made up of different combinations of equity and fixed income from 2000 through December 31, 2017, 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 Barclays U.S. Aggregate 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 industry standards, similar to the typical asset allocation investment portfolio options available within most retirement plans.  The bonds provide stability and income; the stocks add long-term growth potential.


Each Strategic Model differs with respect to its asset allocation, upside performance potential and corresponding downside potential for risk.

Summary

Click on the Exhibit A link below to review a related discussion on risk attitude, risk capacity, risk tolerance, drawdowns and sequence-of-returns risk.

The Four Stages Of A Market Cycle

Why Invest In The Green Pastures Defensive Growth Models

While lower volatility is not a guarantee against losses in the short term, our research has shown that over the long run, a lower volatile portfolio can actually outperform a portfolio of riskier investments over complete market cycles - including both cyclical and secular bull and bear markets - a contradiction of the belief that higher returns require higher risk.


The most important and useful part of Chart 02 above is at the bottom of the chart - which highlights the two WORST DRAWDOWNS (losing periods) you would have experienced in each of the Green Pastures Defensive Growth Models.  The Depth measures the losing periods, from peak to trough; and the Recovery Time measures the number of months that it took to recover from the losing periods (and that's without factoring in inflation).


Unexpected risk is the number one reason investors abandon their strategies and fail to achieve their financial objectives.  That is why so much of what we do focuses on reducing risk in your portfolio.


By maintaining low volatility and, most importantly, minimizing drawdowns (losses), relative to their target asset allocations, the Defensive Growth Models help ease your anxiety so you can stick with an investment plan and harvest long-term wealth through bull and bear markets.  The drawdown analysis is where we believe you will see the merits of Green Pastures' value added - and the real difference in our approach to risk management in comparison to strategically and traditional passively managed buy-and-hold investment strategies.


This pretty much completes the general overview of the Defensive Growth Models - if you want to venture into a more detailed analysis as to why you may consider making an investment - then keep reading.

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 drawdowns (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.

​​Defensive Growth Models

Walk    |    Piaffe    |    Trot    |    Canter    |    Gallop

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   Defensive Growth Models

The Green Pastures Defensive Growth Models can be put to use as stand-alone investment portfolios, as complements to Green Pastures All Weather Models, or as complements to your investment portfolio held elsewhere.


While we do not have a crystal ball as to when a dynamic, strategic or passive investment strategy will perform better, by diversifying investments between Green Pastures dynamically managed Defensive Growth Models and a strategically or passively managed investment portfolio, 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 the more enjoyable aspects of life.  This is especially important when you face sequence-of-returns risk - retiring before a bear market begins or during the early stages of a bear market - when the impact of drawdowns (losses) is magnified.  Losses - coupled with withdrawals - can deplete wealth rapidly.  Millions of retirees' investment portfolios were devastated by sequence-of-returns risk when they retired before or during the early stages of the 2000-2002 and 2007-2009 bear markets, causing their retirement income and lifestyle plans to implode.


To learn more about how we may help you benefit from Green Pastures Defensive Growth Models, please call us at 203.452.8100 or 866.479.3258 or email us via the Contact Us tab.