INVESTMENT SERVICES - Timeless Investment Strategy
Financial Security Advisors’ investment approaches include our Timeless Strategies, discussed in greater detail below. These strategies use primarily no load/no transaction fee mutual funds. As a result, there are no commissions, no charges for buying or selling. The only cost to the client is our management fee. Our clients delegate to us the ability to select appropriate funds and to move assets to new funds or rebalance as required by the strategy, but each individual fund is held in the client’s name at the selected custodian. Financial Security Advisors has no access to those funds.
FSA TIMELESS STRATEGY is designed for investors with $50,000 or more and uses a dynamic approach to asset allocation. This is a true actively managed account where investment selection and portfolio allocations change dynamically based on a proprietary investment process developed by Morris Vickers over more than a quarter century.
FSA TIMELESS BALANCE is an asset allocation strategy that stays 100% invested at all times. A typical FSA Timeless Balance portfolio is currently 30% US Stock Funds, 30% International Stock Funds, 10% High Yield Bonds, 10% High Quality Corporate Bonds, 10% US Treasury Bonds, 5% Real Estate Income Trust, and 5% Precious Metals.
FSA TIMELESS LEADERS is a buy-and-hold, growth-oriented approach to mutual fund investing designed for individuals with less than $50,000 to invest who are just getting started building a portfolio. Financial Security Advisors’ Timeless Strategies follows a four-step decision process.
TIMELESS STRATEGY
(1) By monitoring a database of more than 238 indices that segment the market, including international country markets, we look for where money is moving - where is the demand. That demand will drive prices.
Knowing where money is moving in the markets and which segments are experiencing the greatest demand - whether those segments are large, small, growth, blend or specific industry areas – allows us to identify areas of opportunity.
(2) The next step is to determine the extent to which client portfolios should be invested. What is the big picture? How much risk is there in the market?
Financial Security Advisors purchases market analysis data from several leading independent research companies. This information is used to assess the extent to which the potential for loss is greater than the potential for gain in each market area. From this information, we determine how aggressive client portfolios should be. The higher the perceived risk, the lower the equity exposure will be.
(3) Mutual funds are identified that are highly correlated to areas of demand that are attracting new monies.
(4) Our clients portfolios’ are invested among these funds.
Ideally, we like to have a client’s portfolio diversified among four to six market areas, with a selection of separate funds in each area depending upon account size.
The task of deciding the best individual companies in which to invest is left to the mutual fund manager. The fund companies with their research staffs and analysts have insight and access to companies that we cannot match. But they remain vulnerable to market cycles. This is where Financial Security Advisors adds value.
Timeless investment portfolios never take a contrarian position. We are not trying to anticipate market direction, but rather to keep in step with rising market segments. If market conditions indicate increasing risk, we may move up to 100% of our assets to the protection of a money market fund.
Timeless Strategy has been used since September 1996 as our primary (almost exclusive) strategy. It did very well during the multi-year period of market gains in 1997, 1998, and 1999. It did exceptionally well during the multi-year period of market losses in 2000, 2001, and 2002. On an annual basis, clients did not lose value during these years even as areas of the markets declined 20% to 50%. During the third market pattern, 2004, 2005, and 2006, one of a narrow trading range with an upward bias, Timeless Strategy has provided annual average gains less than the major stock market indices.
Timeless Strategy has demonstrated it can do well under conditions where there is consistency in the market. And, it does well in hitting the “stop” button when the long-term market trend reverses. Because of its cautious nature, it is too conservative to make significant market gains in volatile years. Remember that past performance is not indicative of future returns and all investments have the potential for loss as well as gain.
THE PROFILE OF AN INVESTOR BEST SATISFIED WITH TIMELESS STRATEGIES.
Does this describe you?
(1). I have a limited size account and cannot afford losing a substantial amount of it in a market downturn.
(2) I have a sizeable account, do not want to lose a substantial amount in a market downturn, and do not need to invest for market returns if it means taking a high risk.
TIMELESS BALANCE
FSA TIMELESS BALANCE is an asset allocation strategy that stays 100% invested at all times. The pie chart shown here illustrates a typical FSA Timeless Balance portfolio. The word “Balance” describes the strategy. Each area of asset allocation is designed to balance the others as market conditions change. The mutual funds selected for each allocation are the result of intensive analysis by FSA of the performance of the funds during multiple market conditions. Our goal is to invest client assets in funds with consistent performance patterns that stay true to their investment style. These are funds that have been consistently among the better performers of their asset class or allocation.
If the funds currently used in Timeless Balance had comprised the portfolio during the years 2000-2002, the maximum market decline would have been 13%. The market gain during these years would have been significantly above the loss performance of the average of all the stock markets. Past performance, however, should not be considered an indication of future returns.
THE PROFILE OF THE INVESTOR WHO WILL BE BEST SATISFIED WITH TIMELESS BALANCE.
(1). I do not want a high degree of possibility of losing a substantial amount of money but can take reasonable volatility since I will not need the use of the account for several years.
TIMELESS LEADERS
FSA TIMELESS LEADERS is a buy-and-hold, growth-oriented approach to mutual fund investing designed for individuals with less than $50,000 to invest who are just getting started building a portfolio. In conjunction with our Timeless Strategy and Timeless Balance approach, Financial Services Advisory reviews 5,000 to 6,000 mutual funds going back up to 16 years to select those it feels best suited to its strategies and goals for performance and volatility. For Timeless Leaders, I select 3 to 4 of those mutual funds that, on a pure buy-and-hold basis, have done reasonably well in up years and that I would not have gotten scared out of in the worst of years. These are funds that could be expected to continue to perform well. If a Leaders fund falls out of our return and risk expectations, client assets will be allocated to another fund that meets the Leaders’ criteria. Otherwise, this is a buy-and-hold approach that strives to minimize management fees in order to optimize gains.
WHAT SHOULD YOU DO?
(1). If you have less than $50,000 to invest, begin with our Timeless Leaders approach. Individuals with more than $50,000 should invest in either Timeless Strategies or Timeless Balance depending on your investment profile. (Discuss with me in detail about each one)
(2). If you have more than one account, we recommend diversifying your assets between the two strategies.
(3). If you have an account with more than $100,000 in it, use both strategies, each with 50% of the account value. Backtesting the Timeless Strategy and Timeless Balance over the same time periods, reveals both strategies performed roughly equal over the long term. However, performance varied considerably at points along the time span.
Before you invest, take time to discuss how these investment options will differ and which best fits your risk tolerance.
“As principals of Financial Security Advisors, Twyla and my personal retirement accounts are invested alongside and following the same investment strategies as our clients. Our money is just as much as at risk as our clients. Needless to say, we don’t invest to lose our money or that of our clients.”