Transcript Jeff Hays President Hays Advisory, LLC

Jeff Hays
President
Hays Advisory, LLC
Market
Valuation
Monetary
Conditions
Investor
Psychology
Market
Trend
Hays Advisory
Established 1999 in Nashville
 Established 1999 in Nashville
 Independent, Employee-owned
Over 40 years of Market/Economic Analysis
 Over 40 years of Market/Economic Analysis
 Disciplined, Long-term investors
 Disciplined, Long-term investors
 Total Firm AUM: $904 Million (06/09)
 Total
Firm AUM: Employee-owned
$904 Million (06/09)
Independent,
 Dedicated
education/communication
Dedicated to
to client
client education/communication
 Research
Research and
and commentary:
commentary: www.haysadvisory.com
www.haysadvisory.com

Our Long-Term Theme For Success
The Technology Revolution
produces
A Massive New Flat World
which ignites
A Spread of Democracy
which unleashes
A Huge Sponge of New Consumption
which launches
The Greatest Economic Boom
In the History of the World
which results in
Tremendous Global Stock Market Potential
For Illustrative Purposes Only. We are not soliciting or recommending any action based upon this material.
ETF Interest Continues Upward Trend
Characteristics
ETFs
Mutual Funds
Diversification Benefits
Management Fees
As Low As 0.07%
Average 1.4%
12b-1 Fees
Maximum 1%
Maximum 0.07%
Intraday Pricing
Transparency
Mutual Funds
Google Search Trends
ETF’s
For Illustrative Purposes Only. We are not soliciting or recommending any action based upon this material.
Hays Global and International ETF Portfolios
Our Two Pronged Approach to Adding Alpha
Tactical Allocation
+
Portfolio Construction
Asset Allocation
ETF Universe
Ranking
ETF Selection
Monetary
Investor
Psychology
Valuations
Investment
Committee
Market Trend
For Illustrative Purposes Only. We are not soliciting or recommending any action based upon this material.
Asset Allocation Model

Psychology P1-P6
Fear/Greed,

Monetary M1-M6
Yield
Curve, Fed, $ on Sidelines
 Valuation
P/E’s

Monetary
Conditions
Investor
Psychology
Market
Valuation
Smart $/Dumb$
V1-V6
, Apprec. Potential, IBES
Market Trend
Investment
& Trading Phases
provide a technical component to
compliment model
Market
Trend
For Illustrative Purposes Only. We are not soliciting or recommending any action based upon this material.
The Hays Global and International Selection Process
800
160
ETF Category Weighting
Domestic and International
Broad / Index
Sector Specific
Industry Specific
Regional
Country Specific
Final ETF Selections
Top 20% Of Entire ETF Universe
Investment Committee
Volume, Diversification, Expense,
Technicals
Final ETF Portfolio
7-15 Concentrated Positions
For Illustrative Purposes Only. We are not soliciting or recommending any action based upon this material.
ETFs: Purchase and Sell Discipline
 Similar to the equity portfolios, Hays adheres to a defined
buy/sell process in our managed ETF portfolios.
Purchase Candidates:
Technically favorable
Top Relative Strength
Top 20% Ranking vs. entire
ETF universe
Sell Candidates:
Underperforming ETFs become
flagged as sell candidates when
performance falls in bottom 40%
of ETF universe
(Relative Strength)
For Illustrative Purposes Only. We are not soliciting or recommending any action based upon this material.
Hays Global ETF Portfolios
For Illustrative Purposes Only. We are not soliciting or recommending any action based upon this material.
Hays Global ETF Portfolio
Performance: Annualized Returns* - Inception 2/1/06
YTD*
15.40
2008
-41.02
2007
14.69
2006* Inception*
2.59
-6.76
Global ETF -“Pure” Gross** 19.65
15.90
-41.48
15.86
3.53
-5.86
MSCI All Country World
22.54
9.59
-41.85
12.19
15.81
-5.38
MSCI EAFE ***
23.76
5.63
-45.09
8.62
16.29
-8.72
S&P 500 TR ***
15.93
3.17
-36.99
5.50
12.59
-7.31
Global ETF - Net
QTR*
19.40
*All returns for periods less than one year have NOT been annualized. Since inception # is annualized. 2006 return is from 2/1/2006.
**“Pure” gross of fees returns are supplemental to net returns. For wrap accounts, “pure” gross of fees returns reflect the deduction of expenses
charged by the exchange traded funds but do not reflect the deduction of any other expenses, including trading costs. For non-wrap accounts, which
represented 2.9% of the composite assets at the end of the period, “pure” gross of fees returns reflect the deduction of trading costs and expenses
charged by the exchange traded funds but do not reflect the deduction of any other expenses.
*** The MSCI All Country World Index is the Global Portfolio’s benchmark. We are presenting the S&P & EAFE for comparison only.
For Illustrative Purposes Only. We are not soliciting or recommending any action based upon this material. Past performance is no
indication of future results. Please see important disclosures at the end of this presentation.
Global ETF Portfolio Performance Disclosures
•
•
•
•
•
•
•
•
•
The recommended asset class portfolio constraints for the Global ETF Composite strategy allow for a client’s portfolio to
be invested in as much as 100% ETF equities with a minimum of 50% when market risk rises. While Hays Advisory’s
goal is to always adhere to the maximum and minimum constraints, market conditions or other special situations may
cause a greater variance.
Global ETF composite assets as of June 30, 2009 were 1.22 million, which represented 0.13% of the firm’s total assets.
Less than twenty two percent of the assets in the composite were non-fee paying assets. Returns are calculated in U.S.
dollars.
Client’s returns will be reduced by the advisory fees and any other expenses it may incur in the management of its
investment accounts. Hays Advisory’s investment advisory fees are described in detail in Part II of its Form ADV.
The market value of Hays Advisory’s portfolios’ investments will fluctuate as the stock and bond markets fluctuate. Market
risk may affect a single issuer, industry or sector of the economy or may affect the market as a whole. Stock market
conditions vary from year to year, and can result in a decline in market value due to material market or economic
conditions.
The net performance results portrayed reflect the deduction of advisory fees and other expenses, which the client
would have paid during the periods shown. Prior to 2008, the composite contained a single, non-fee paying account. Net
performance results were calculated hypothetically by deducting a 1% annual fee billed at 0.25% per quarter – Hays
Advisory’s highest applicable management fee during the period – to reflect what a client may have paid during the
periods shown.
The results portrayed reflect the reinvestment of dividends, capital gains and other earnings when appropriate. Dividends
and capital gains may be invested in money market funds or other cash equivalents pending reinvestment in other
portfolio securities.
Clients and prospective clients should understand that past performance is no guarantee of future results. There is
always the chance that market conditions or portfolio performance might deteriorate in the future, and clients may
experience real capital losses in their managed accounts.
There were no investment strategies employed to obtain the results portrayed other than those strategies disclosed in
Hays Advisory, LLC’s Form ADV or other disclosure brochure. The results portrayed are derived from the composite
performance of all the discretionary Global ETFaccounts managed by Hays Advisory, including both the equity and fixed
income portions of such accounts.
The Global ETF portfolio composite results portrayed during the periods are compared to the performance of MSCI All
Country World Index. The MSCI ACWI (All Country World Index) Index is a free float-adjusted market capitalization
weighted index that is designed to measure the equity market performance of developed and emerging markets. The
volatility of the MSCI ACWI Index may be materially different from that of the performance composite. In addition, the
composite’s holdings may differ significantly from the securities that comprise the MSCI ACWI Index. The MSCI ACWI
Index has not been selected to represent the most appropriate benchmark to compare the composite’s performance, but
rather is disclosed to allow for comparison of the composite’s performance to that of a well known and widely recognized
index. You cannot invest directly in this Index.
Hays International ETF Portfolio
For Illustrative Purposes Only. We are not soliciting or recommending any action based upon this material.
Hays International ETF Portfolio
Performance: Annualized Returns* - Inception 2/1/06
Int. ETF - Net
QTR*
26.96
YTD*
19.67
2008
-44.45
2007
29.31
2006*
17.23
Inception*
0.22
Int. ETF -“Pure” Gross**
27.37
20.52
-43.82
30.60
18.30
1.32
MSCI ACW Excl. US
27.94
14.35
-45.25
17.10
18.88
-3.94
MSCI EAFE ***
23.76
5.63
-45.09
8.62
16.29
-8.72
*All returns for periods less than one year have NOT been annualized. Since inception # is annualized. 2006 return is from 2/1/2006.
**“Pure” gross of fees returns are supplemental to net returns. For wrap accounts, “pure” gross of fees returns reflect the deduction of expenses
charged by the exchange traded funds but do not reflect the deduction of any other expenses, including trading costs. For non-wrap accounts, which
represented 2.9% of the composite assets at the end of the period, “pure” gross of fees returns reflect the deduction of trading costs and expenses
charged by the exchange traded funds but do not reflect the deduction of any other expenses.
*** The MSCI All Country World Index Excl. US is the International Portfolio’s benchmark. We are presenting the EAFE returns for comparison only.
For Illustrative Purposes Only. We are not soliciting or recommending any action based upon this material. Past performance is no
indication of future results. Please see important disclosures at the end of this presentation.
Hays International ETF Portfolio
Fund
American EuroPacific Growth
Templeton Foreign
Aim Intl Growth Fund
Vanguard Int’l Growth
Dodge & Cox Int Stock
Hays International ETF Portfolio (net)
YTD*
2008
12.57%
18.24%
11.04%
14.02%
16.07%
19.67%
-40.5%
-46.1%
-40.0%
-44.83%
-46.0 %
-44.45%
From 2/1/06 2007 12/31/06**
19.0%
17.2%
14.0%
16.2%
11.0%
29.31%
14.97%
14.03%
18.77%
17.82%
20.16%
17.23%
* Through 6/30/2009.
** Mutual fund returns calculated using daily Net Asset Value for the period displayed.
For Illustrative Purposes Only. We are not soliciting or recommending any action based upon this material. Past performance is no
indication of future results. Please see important disclosures at the end of this presentation.
International ETF Portfolio Performance Disclosures
•
•
•
•
•
•
•
•
•
The recommended asset class portfolio constraints for the International ETF Composite strategy allow for a client’s
portfolio to be invested in as much as 100% ETF equities with a minimum of 50% when market risk rises. While Hays
Advisory’s goal is to always adhere to the maximum and minimum constraints, market conditions or other special
situations may cause a greater variance.
International ETF composite assets as of June 30, 2009 were $3.35 million, which represented 0.37% of the firm’s total
assets. Eleven percent of the assets in the composite were non-fee paying assets. Returns are calculated in U.S. dollars.
Client’s returns will be reduced by the advisory fees and any other expenses it may incur in the management of its
investment accounts. Hays Advisory’s investment advisory fees are described in detail in Part II of its Form ADV.
The market value of Hays Advisory’s portfolios’ investments will fluctuate as the stock and bond markets fluctuate. Market
risk may affect a single issuer, industry or sector of the economy or may affect the market as a whole. Stock market
conditions vary from year to year, and can result in a decline in market value due to material market or economic
conditions.
The net performance results portrayed reflect the deduction of advisory fees and other expenses, which the client
would have paid during the periods shown. Prior to 2008, the composite contained a single, non-fee paying account. Net
performance results were calculated hypothetically by deducting a 1% annual fee billed at 0.25% per quarter – Hays
Advisory’s highest applicable management fee during the period – to reflect what a client may have paid during the
periods shown.
The results portrayed reflect the reinvestment of dividends, capital gains and other earnings when appropriate. Dividends
and capital gains may be invested in money market funds or other cash equivalents pending reinvestment in other
portfolio securities.
Clients and prospective clients should understand that past performance is no guarantee of future results. There is
always the chance that market conditions or portfolio performance might deteriorate in the future, and clients may
experience real capital losses in their managed accounts.
There were no investment strategies employed to obtain the results portrayed other than those strategies disclosed in
Hays Advisory, LLC’s Form ADV or other disclosure brochure. The results portrayed are derived from the composite
performance of all the discretionary International ETF accounts managed by Hays Advisory, including both the equity and
fixed income portions of such accounts.
The International ETF portfolio composite results portrayed during the periods are compared to the performance of MSCI
All Country World X US Index. The MSCI ACWI (All Country World Index) ex-USA is a free float-adjusted market
capitalization index that is designed to measure equity market performance in the global developed and emerging
markets, excluding the United States. The volatility of the MSCI ACWI X US Index may be materially different from that of
the performance composite. In addition, the composite’s holdings may differ significantly from the securities that comprise
the MSCI ACWI X US Index. The MSCI ACWI X US Index has not been selected to represent the most appropriate
benchmark to compare the composite’s performance, but rather is disclosed to allow for comparison of the composite’s
performance to that of a well-known and widely recognized index. You cannot invest directly in this Index.
Hays Global and International ETF Portfolios
• ETF portfolios created to take advantage of Global
Opportunities
• Advantages of ETFs vs Mutual Funds
• Asset Allocation determined by Hays Model - Can
raise cash
• Relative Strength based quantitative process
• Concentrated portfolios – 7 – 15 positions
• Call 800-789-2194 or e-mail [email protected]
for availability and fee schedule.