A. Research Affiliates
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B. Use of Website
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Users of any content found on or accessible through Research Affiliates’ website (“Content”) should be aware of the risks associated with data sources and quantitative processes used to produce site Content. Errors may exist in data acquired from third party vendors, the calculations or coding used to produce Content, the assumptions or models used in relation to Content, or the display or updating of any Content. While Research Affiliates takes steps to identify errors so as to minimize the potential likelihood or impact of such errors, Research Affiliates cannot guarantee that such errors will not occur. The user therefore agrees, as a condition precedent to usage of such Content that (i) all Content is accepted on an “as is” basis; (ii) the user hereby fully disclaims all warranties of merchantability, fitness for a particular use, or any implied warranties; (iii) the user freely and knowingly assumes all risks of any Content usage; and (iv) the user fully releases and holds Research Affiliates harmless, along with its affiliates and all of their employees, owners, managers, and agents, from any damages or losses resulting from the use of such Content by the user along with indemnifying Research Affiliates for any damages, costs or attorneys’ fees incurred by Research Affiliates as a result of any uses of such Content by the user.
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Investors should be aware of the risks associated with data sources and quantitative processes used in our investment management process. Errors may exist in data acquired from third party vendors, the construction of model portfolios, and in coding related to the index and portfolio construction process. While Research Affiliates takes steps to identify data and process errors so as to minimize the potential impact of such errors on index and portfolio performance, we cannot guarantee that such errors will not occur.
D. Patent, Trademarks, and Copyrights
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The FTSE Research Affiliates Fundamental Indexes are calculated by FTSE International Limited (“FTSE”) in conjunction with Research Affiliates. All rights and interests in the FTSE Research Affiliates Fundamental Indexes vest in FTSE. All rights in and to the Research Affiliates Fundamental Index™ weighting methodology used in the calculation of the FTSE Research Affiliates Fundamental Indexes vest in Research Affiliates. All rights in the FTSE indexes and / or FTSE ratings (together the “FTSE Data”) vest in FTSE and/or its licensors. Except to the extent disallowed by applicable law, neither FTSE nor Research Affiliates nor their licensors shall be liable (including in negligence) for any loss arising out of use of the FTSE Research Affiliates Fundamental Indexes, the FTSE Data or underlying data by any person. “FTSE®” is a trademark of the London Stock Exchange Plc and is used by FTSE under license. “Research Affiliates” and “Fundamental Index” are trademarks of Research Affiliates. FTSE is not an investment adviser and makes no representation regarding the advisability of investing in any security. Inclusion of a security in an index is not a recommendation to buy, sell or hold such security. No further distribution of FTSE Data is permitted without FTSE’s express written consent.
Copyright MSCI. All Rights Reserved. Without prior written permission of MSCI, this information and any other MSCI intellectual property may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used to create any financial instruments or products or any indices. This information is provided on an “as is” basis, and the user of this information assumes the entire risk of any use made of this information. Neither MSCI nor any third party involved in or related to the computing or compiling of the data makes any express or implied warranties, representations or guarantees concerning the MSCI index-related data, and in no event will MSCI or any third party have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) relating to any use of this information.
Certain indices referenced herein may be calculated by S&P Dow Jones Indices LLC or its affiliates. S&P® is a registered trademark of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and have been licensed for use by S&P Dow Jones Indices LLC and its affiliates. Investment products based on any such indices are not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P or their respective affiliates and none of S&P Dow Jones Indices LLC, Dow Jones, S&P or their respective affiliates makes any representation regarding the advisability of investing in such product(s).
S&P Dow Jones Indices LLC, its affiliates, sources and distribution agents, and each of their respective officers, directors, employees, agents, representatives and licensors (collectively, the “Index Calculation Agent”) shall not be liable to Research Affiliates, any customer or any third party for any loss or damage, direct, indirect or consequential, arising from (i) any inaccuracy or incompleteness in, or delays, interruptions, errors or omissions in the delivery of the RAFI™ US Equity Long/Short Index or any data related thereto (the “Index Data”) or (ii) any decision made or action taken by Research Affiliates, any customer or third party in reliance upon the Index Data. The Index Calculation Agent does not make any warranties, express or implied, to Research Affiliates, any of its customers or anyone else regarding the Index Data, including, without limitation, any warranties with respect to the timeliness, sequence, accuracy, completeness, currentness, merchantability, quality or fitness for a particular purpose or any warranties as to the results to be obtained by Research Affiliates, any of its customers or other person in connection with the use of the Index Data. The Index Calculation Agent shall not be liable to Research Affiliates, its customers or other third parties for loss of business revenues, lost profits or any indirect, consequential, special or similar damages whatsoever, whether in contract, tort or otherwise, even if advised of the possibility of such damages.
Citigroup Index LLC, a subsidiary of Citigroup Inc., and Research Affiliates, have agreed to jointly create and distribute investable fixed income indices (the “Citi RAFI Bonds Index Series”) based on the Research Affiliates’ patented Fundamental Index™ methodology. All intellectual property, including trademarks, contributed by Research Affiliates and Citigroup Index LLC shall remain solely vested with the respective contributor. Neither Citigroup Index LLC nor Research Affiliates make any warranties, express or implied, to any of their customers or anyone else regarding the accuracy or completeness of any data related to the Citi RAFI Bonds Index Series. All information is provided for information purposes only. Neither Citigroup Index LLC nor Research Affiliates accept any liability for any errors or any loss arising from the use of any data or information set forth herein. The opinions expressed herein are solely those of Research Affiliates, except where otherwise indicated. Citigroup Index, LLC is not responsible for the formatting or configuration of this material, for any opinions expressed, or for any inaccuracy in Research Affiliates’ presentation thereof. CITI is a registered trademark and service mark of Citigroup Inc. or Citibank, N.A., is used under license by Research Affiliates and is used and registered throughout the world.
The RAFI™ Bonds US Investment Grade Index and RAFI Bonds US High Yield Index is calculated by ALM Research Solutions, LLC in conjunction with Research Affiliates. All rights and interests in the RAFI Bonds US Investment Grade Index and the RAFI Bonds US High Yield Index vest in Research Affiliates. All rights in and to the Research Affiliates Fundamental Index™ concept used in the calculation of the RAFI Bonds US Investment Grade Index and the RAFI Bonds US High Yield Index vest in Research Affiliates. The RAFI™ Bonds US Investment Grade Index and the RAFI Bonds US High Yield Index are not sponsored, endorsed, sold or promoted by ALM Research Solutions, LLC, and ALM Research Solutions, LLC makes no representation regarding the advisability of investing in such product(s). Neither ALM Research Solutions, LLC nor Research Affiliates make any warranties, express or implied, to any of their customers nor anyone else regarding the accuracy or completeness of any data related to the RAFI Bonds US Investment Grade Index or the RAFI Bonds US High Yield Index. All information is provided for information purposes only. Neither ALM Research Solutions, LLC nor Research Affiliates accept any liability for any errors or any loss arising from the use of information in this publication.
Frank Russell Company is the source and owner of the Russell index data contained or reflected in this material and copyrights related thereto. Frank Russell Company and Research Affiliates have entered into a strategic alliance with respect to the Russell Fundamental Indexes. Subject to Research Affiliates’ intellectual property rights in certain content, Frank Russell Company is the owner of all copyrights related to the Russell Fundamental Indexes. Russell® is a trademark of Frank Russell Company. Frank Russell Company and Research Affiliates jointly own all trademark and service mark rights in and to the Russell Fundamental Indexes. Research Affiliates is the owner of the trademarks, service marks, patents and copyrights related to the Fundamental Index™ and the Fundamental Index methodology. The presentation may contain confidential information and unauthorized use, disclosure, copying, dissemination, or redistribution is strictly prohibited. This is a presentation of Research Affiliates. Frank Russell Company is not responsible for the formatting or configuration of this material or for any inaccuracy in Research Affiliates’ presentation thereof.
The trademarks Fundamental Index™, RAFI™, RAFI Low Volatility™, Research Affiliates Equity™, RAE™ and the Research Affiliates™ trademark and corporate name and all related logos are the exclusive intellectual property of Research Affiliates and in some cases are registered trademarks in the U.S. and other countries including United States Registrations 3,286,704; 3,275,863; 4,501,481; 4,296,159; 4,368,339; 3,319,055; 4,327,921; 4,828,093; 4,828,094; 4,942,123; Australia Registrations 1,142,019; 1,151,464; 1,430,186; 1,640,100; 1640099; Brazil Pending Applications 840,815,425; 840,821,328; 840,827,253; 840,827,261; 840,827,270; Canada Registrations TMA722,568; TMA715,271;TMA 917,309; TMA 927,651; China Registrations 7,234,013; 7,234,014; 8,805,524; 13,271,508; 15136525; 15136526; 13271509; European Community Registrations 4,201,844; 4,364,097; 010,045,383; 013,033,337; 013,161,856; 013,161,849; 013,723,861; Hong Kong Registrations 300,945,748; 303096027;303096036; India Registrations 2,033,339; 2,033,337; India Pending Applications 2,638,595, 2,638,594, 2,920,877; Japan Registrations 5,044,103; 4,918,995; 5,763,741; 5,772,652; 5,772,651; 5796486; Mexico Pending Application 1,516,352; South Africa Registrations 2007/14048; 2007/14049; 2007/26574; 2007/26575; 2007/26689; 2007/26690; South Africa Pending Application 2014/21189; Taiwan Registrations 013,511,611; 1,315,612;1729071; United Kingdom Registration UK00003093530.
Various features of the Fundamental Index® methodology, including an accounting data-based non-capitalization data processing system and method for creating and weighting an index of securities, are protected by various patents, and patent-pending intellectual property of Research Affiliates (US Patent No. 7,620,577; 7,792,719; 8,374,937, 8,374,939; 8,380,604; 8,589,276, 8,694,402, RE 44,098; and RE 44,362; Patent Pending Publ. Nos. US2014-0046872, WO 2005/076812, WO 2007/078399 A2, and WO 2008/118372). Intellectual property protected by one, or more, of the foregoing may be used in material presented.
Research Affiliates does not provide investment advice outside of the United States, Canada and Ireland and neither it nor its affiliated entities or their officers, managers, owners or employees offer or sell any securities, commodities or derivative instruments or products. Any such business may only be conducted through registered or licensed entities and individuals permitted to do so within the respective jurisdiction and only in conjunction with the legally required disclosure documents and subject to the all legally required regulatory filings.
Research Affiliates, its affiliates, agents, and each of their respective officers, directors, employees, agents, representatives and licensors (collectively “Research Affiliates” in this context) shall not be liable to any third party for any loss or damage, direct, indirect or consequential, arising from or related to (i) any inaccuracy or incompleteness in, errors or omissions in the enclosed information (the “Presentation Material”) or (ii) any decision made or action taken by any third party in reliance upon the Presentation Material. Research Affiliates does not make any warranties, express or implied, to anyone regarding the Presentation Material, including, without limitation, any warranties with respect to the timeliness, sequence, accuracy, completeness, currentness, merchantability, quality or fitness for a particular purpose or any warranties as to the results to be obtained by any third-party in connection with the use of the Presentation Material. Research Affiliates shall not be liable to anyone for loss of business revenues, lost profits or any indirect, consequential, special or similar damages whatsoever, whether in contract, tort or otherwise, even if advised of the possibility of such damages.
©2016 Research Affiliates, LLC. All rights reserved. Duplication or dissemination is strictly prohibited without prior written permission.
E. Research Affiliates Asset Allocation and Expected Returns Website
The information contained within the Research Affiliates Website regarding Asset Allocation and Expected Returns (www.researchaffiliates.com/assetallocation) may represent real return forecasts for several asset classes and not for any Research Affiliates fund or strategy. These forecasts are forward-looking statements based upon the reasonable beliefs of Research Affiliates and are not a guarantee of future performance. Forward-looking statements speak only as of the date they are made, and Research Affiliates assumes no duty to and does not undertake to update forward-looking statements. Forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time. Actual results may differ materially from those anticipated in forward-looking statements.
All projections provided are estimates and are in U.S. dollar terms, unless otherwise specified. Given the complex risk-reward trade-offs involved, one should always rely on judgment as well as quantitative optimization approaches in setting strategic allocations to any or all of the above asset classes. Please note that all information shown is based on qualitative analysis. Exclusive reliance on the above is not advised. This information is not intended as a recommendation to invest in any particular asset class, product, security, derivative, commodity, currency or strategy or as a promise of future performance. Please note that these asset class and strategy assumptions are passive only–they do not consider the impact of active management. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Assumptions, opinions and estimates are provided for illustrative purposes only. They should not be relied upon as recommendations to buy or sell any securities, commodities, derivatives or financial instruments of any kind. Forecasts of financial market trends that are based on current market conditions or historical data constitute a judgment and are subject to change without notice. We do not warrant its accuracy or completeness. This material has been prepared for information purposes only and is not intended to provide, and should not be relied on for, accounting, legal, tax, investment or tax advice. There is no assurance that any of the target prices mentioned will be attained. Any market prices are only indications of market values and are subject to change.
The data published herein may be simulated and in such instances, no allowance has been made for trading costs, management fees, or other costs, are not indicative of any specific investment, are unmanaged and cannot be invested in directly. Past performance, including simulated performance, is no guarantee of future performance and actual investment results may differ. Any information and data pertaining to an index contained in this document relate only to the index itself and not to any asset management product based on the index. With the exception of the data on Research Affiliates Fundamental Index™, all other information and data are based on information and data from third party sources. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading, but are based on the historical returns of the selected investments, indices or investment classes and various assumptions of past and future events. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. Also, since the trades have not actually been executed, the results may have under or over compensated for the impact of certain market factors. In addition, hypothetical trading does not involve financial risk. No hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of the trading losses are material factors which can adversely affect the actual trading results. There are numerous other factors related to the economy or markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results, all of which can adversely affect trading results.
The asset classes are represented by broad-based indices which have been selected because they are well known and are easily recognizable by investors. Indices have limitations because indices have volatility and other material characteristics that may differ from an actual portfolio. For example, investments made for a portfolio may differ significantly in terms of security holdings, industry weightings and asset allocation from those of the index. Accordingly, investment results and volatility of a portfolio may differ from those of the index. Also, the indices noted in this presentation are unmanaged, are not available for direct investment, and are not subject to management fees, transaction costs or other types of expenses that a portfolio may incur. In addition, the performance of the indices reflects reinvestment of dividends and, where applicable, capital gain distributions. Therefore, investors should carefully consider these limitations and differences when evaluating the index performance.
No investment process is risk free and there is no guarantee of profitability; investors may lose all of their investments. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. Diversification does not guarantee a profit or protect against loss. Investing in foreign securities presents certain risks not associated with domestic investments, such as currency fluctuation, political and economic instability, and different accounting standards. This may result in greater share price volatility. The prices of small- and mid-cap company stocks are generally more volatile than large-company stocks. They often involve higher risks because smaller companies may lack the management expertise, financial resources, product diversification and competitive strengths to endure adverse economic conditions.
Bond prices fluctuate inversely to changes in interest rates. Therefore, a general rise in interest rates can result in the decline of the value of your investment. High-yield bonds, also known as junk bonds, are subject to greater risk of loss of principal and interest, including default risk, than higher-rated bonds. Investing in fixed-income securities involves certain risks such as market risk if sold prior to maturity and credit risk especially if investing in high-yield bonds which have lower ratings and are subject to greater volatility. All fixed-income investments may be worth less than original cost upon redemption or maturity. Income from municipal securities is generally free from federal taxes and state taxes for residents of the issuing state. While the interest income is tax-free, capital gains, if any, will be subject to taxes. Income for some investors may be subject to the federal alternative minimum tax (AMT).
There are special risks associated with an investment in real estate, including credit risk, interest-rate fluctuations and the impact of varied economic conditions. Distributions from REIT investments are taxed at the owner’s tax bracket.
Hedge funds or alternative investments are complex, speculative investment vehicles and are not suitable for all investors. They are generally open to qualified investors only and carry high costs and substantial risks and may be highly volatile. There is often limited (or even nonexistent) liquidity and a lack of transparency regarding the underlying assets. They do not represent a complete investment program. The investment returns may fluctuate and are subject to market volatility so that an investor’s shares, when redeemed or sold, may be worth more or less than their original cost. Hedge funds are not required to provide investors with periodic pricing or valuation and are not subject to the same regulatory requirements as mutual funds. Investing in hedge funds may also involve tax consequences. Speak to your tax advisor before investing. Investors in funds of hedge funds will incur asset-based fees and expenses at the fund level and indirect fees, expenses and asset-based compensation of investment funds in which these funds invest. An investment in a hedge fund involves the risks inherent in an investment in securities as well as specific risks associated with limited liquidity, the use of leverage, short sales, options, futures, derivative instruments, investments in non-U.S. securities, junk bonds and illiquid investments. There can be no assurances that a manager’s strategy (hedging or otherwise) will be successful or that a manager will use these strategies with respect to all or any portion of a portfolio. Please carefully review the Private Placement Memorandum or other offering documents for complete information regarding terms, including all applicable fees, as well as other factors you should consider before investing.
Buying commodities allows for a source of diversification for those sophisticated persons who wish to add commodities to their portfolios and who are prepared to assume the risks inherent in the commodities market. Any purchase represents a transaction in a non-income producing commodity and is highly speculative. Therefore, commodities should not represent a significant portion of an individual’s portfolio. Buying gold, silver, platinum and palladium allows for a source of diversification for those sophisticated persons who wish to add precious metals to their portfolios and who are prepared to assume the risks inherent in the bullion market. Any bullion or coin purchase represents a transaction in a non-income-producing commodity and is highly speculative. Therefore, precious metals should not represent a significant portion of an individual’s portfolio.
Trading foreign exchange involves a high degree of risk. Exchange rates between foreign currencies change rapidly do to a wide range of economic, political and other conditions, exposing one to risk of exchange rate losses in addition to the inherent risk of loss from trading the underlying financial product. If one deposits funds in a currency to trade products denominated in a different currency, one’s gains or losses on the underlying investment therefore may be affected by changes in the exchange rate between the currencies. If one is trading on margin, the impact of currency fluctuation on that person’s gains or losses may be even greater.
Investments that are concentrated in a specific sector or industry increase their vulnerability to any single economic, political or regulatory development. This may result in greater price volatility.
This information has been prepared by Research Affiliates based on data and information provided by internal and external sources. While we believe the information provided by external sources to be reliable, we do not warrant its accuracy or completeness.
Source: MSCI Inc. These forecast expected returns are calculated by Research Affiliates using data provided by MSCI Inc. No funds or securities relating to these forecast expected returns are sponsored, endorsed or promoted by MSCI Inc., and MSCI bears no liability with respect to any such funds or securities.
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