Talis Portfolio Model Returns Disclosure

Talis Portfolio Model Returns Disclosure

Please read the following important disclosure information and indicate that you have done so by clicking on the "accept" button at the bottom of this page in order to view the returns for our portfolio models.

Our structured model portfolios were designed and constructed based on modern portfolio theory (MPT) and the component funds have been substantially the same* since inception. As a matter of practice, we do not include better performing mutual funds and toss out lower performing mutual funds to enhance our returns.  However, since these are model portfolios, there can be no assurance that a client would have achieved similar rates of return over the time frame.  In addition, since the time period is historical, there can be no assurance that future results achieved by clients will in any way resemble those presented for the model portfolios.  Although we have made every attempt to present this data fairly, hypothetical performance is still potentially misleading.  Hypothetical data does not represent actual performance and should not be interpreted as an indication of actual performance.

These portfolio designs are based on Modern Portfolio Theory (MPT) and the Fama-French 3-factor model.  The 3-factor model of investing is an academically and mathematically rigorous approach to measuring expected investment returns. The result of the application of the model is that so-called “small cap” stocks and stocks with a high book-to-market ratio (commonly referred to as “value” stocks) provide a greater expected return than the overall market over time.

However, these two asset classes – small cap and value stocks – provide greater expected return because they are riskier asset classes. Consequently, the additional risk of these two asset classes should be mitigated or diversified as best as possible, using other non-correlating asset classes.

* At January 1, 2008, we substituted the DFA U.S. Micro Cap Fund with the DFA U.S. Small Cap Fund and the DFA U.S. Small Cap Value Fund with the DFA U.S. Targeted Value Fund for clients' new portfolios and for measuring investment returns. We did this because the two funds -- the DFA U.S. Micro Cap Fund and the DFA U.S. Small Cap Value Fund -- were closing. We maintained exactly the same percentage of each of the new funds in our portfolios. Substituting the new funds for the closed funds has had de minimis effect on our portfolios' investment returns.

Things to Know and Understand About the Performance Data

  • Performance data represents past performance only.
  • Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown.
  • The investment return and the principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.
  • Results do not include the impact of taxes, if any.

Things to Know and Understand About Investment Returns

  • Returns include reinvestment of dividends and capital gains. Returns are net of a) fund expenses and b) our maximum advisory fee, which is 1.00% of assets under management, billed quarterly (0.25% per quarter) in arrears.
  • Depending upon the size of your account(s), your advisory fee may be significantly less.
  • Returns for periods of less than one (1) year are actual returns.  Returns for periods greater than one year are annualized returns.

Things to Know About Our Philosophy, Approach and Methodology

  • The figures presented are illustrations of returns for the types of portfolios we design for clients.
  • As noted above, our investment philosophy is based on MPT, a well-known and academically supported approach to investing.
  • The MPT approach to investing is a passive, long-term, buy-and-hold strategy, implemented through globally diversified portfolios.
  • We develop these types of portfolios by using mutual funds, representing asset classes that academic research has shown provide higher expected returns.
  • These mutual funds are combined into a single portfolio.
  • Our portfolios are constructed with low correlations among the component mutual funds.
  • This provides diversification that should reduce risk caused by volatility in achieving a greater expected return. Any portfolio should be regularly rebalanced to maintain agreed upon asset allocations.  The portfolio performance reported is based on rebalancing annually.
  • The portfolio models presented may or may not reflect portfolios allocations determined to be appropriate for each individual client.
  • Clients with the portfolio allocations shown may achieve results that differ from the figures presented based on capital inflows and outflows, the timing of rebalancing, advisory fees charged, and/or other factors.

Things to Know About “Standard Deviation” as a Measure of Risk

  • We use an annualized standard deviation figure as an approximation because the annualized figure is the most common way of presenting standard deviation and because it provides a measure that may be more easily compared to Morningstar and other advisors’ figures.
  • To calculate the annualized standard deviation, we multiply the monthly standard deviation figure by the square root of the number of periods in a year.
  • Please note that standard deviation calculated using actual annual data may differ materially from this estimate.

Sources and Description of Data

All performance data is supplied by Dimensional Fund Advisors, Inc. Information is from sources deemed reliable but its accuracy cannot be guaranteed. Performance prior to April 1, 1998 is calculated using index data: US Large Cap: S&P 500 Index; US Large Cap Value: Fama French US Large Value Index (ex utilities); US Micro Cap: CRSP Index, Deciles 9-10; US Small Cap Value: Fama French US Small Value Index (ex utilities); Real Estate: Dow Jones Wilshire REIT Index; International Value: Fama French International Value Index; International Small Cap:  Dimensional International Small Cap Index; International Small Cap Value: Dimensional International Small Cap Value Index; Emerging Markets:  Fama French Emerging Markets Index; Emerging Markets Value: Fama French Emerging Markets Value Index; Two Year Global Fixed Income:  Citigroup World Government Bond Index 1-3 Years (hedged); Five Year Global Fixed Income: Citigroup World Government Bond Index 1-5 Years (hedged).  Where index data is used in calculating portfolio returns, we have applied the same expense ratio to the index that is incurred by the fund that it represents in the portfolio.

Blended benchmark indexes are constructed using the MSCI World Index (net div) for the equity portion of the index, Citigroup World Government Bond Index 1-3 Years (hedged) for the fixed income portion, and Dow Jones US Select REIT Index for the real estate portion.  The blended benchmark indexes are rebalanced annually, as are the portfolio models.  The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index.

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