IMPORTANT INFORMATION ABOUT THE POWERFUND PORTFOLIOS
The performance numbers displayed for each of the MAXadvisor Powerfund Portfolios represent the performance for investors who have owned the underlying mutual funds and exchange-traded funds (ETFs) shown in the model portfolios (in the recommended allocations) since inception of the portfolios on March 31st, 2002.
These figures include all mutual fund management and operating expenses, but do not include all possible commissions that may have been charged to buy and/or sell the funds in question, since commission rates vary by portfolio size and the entity or agent that executes the trades.
If the mutual funds in question were purchased directly from the mutual fund companies — which is possible, except in the case of ETFs — there would be no commission paid to buy or sell the funds, other than short-term redemption fees, if any. In addition, many of our mutual fund holdings are available for purchase with no transaction fee (NTF) from many major brokerage platforms.
Since June 30th, 2010, the Powerfunds model portfolios have been invested with real dollars in brokerage accounts at TD Ameritrade, and have captured the actual returns earned by investors, including commissions charged to buy and sell funds at that particular brokerage platform, as well as short-term redemption fees charged by the fund or broker, if any.
The portfolios were allocated with an original investment of $60,000. Investors with larger portfolios may have experienced slightly higher performance as the drag of fixed commissions to buy certain funds and ETFs (typically ranging from $9 to $25 per buy or sell) may have represented a smaller percentage of the total portfolio. Likewise, an investor with less than $60,000 may have experienced slightly lower returns.
At the time of the real money conversion in 2010, we discontinued several portfolios in order to simplify the portfolio lineup and avoid the impracticality of investing actual dollars in seven different model portfolios.
All of our model portfolios, including the discontinued ones, had outperformed the S&P 500 since inception of the portfolios (3/31/2002) at the time of consolidation and had similar broad investment strategies at varying risk levels with some overlapping holdings. At the time of the conversion, we also stopped charging a subscription fee to access the model portfolios.
Performance figures do not take subscription fees into consideration, which would have lowered returns (prior to July 2010) in inverse proportion to portfolio size, similar to the commissions charged to purchase or sell funds in the portfolios.
At no point in the history of the portfolios have we factored in taxes on return calculations. All returns are presented as pre-tax returns. Post-tax returns of the S&P 500 may be lower than pre-tax returns by a smaller percentage when compared to post-tax to pre-tax returns of the Powerfunds Portfolios, since our returns have been achieved with bonds, which have been taxed at higher rates, as well as stocks and required realizing capital gains along the way as the portfolios changed.
Since our conversion to real money, actual portfolio allocations may differ from the official allocation from market movements – such that a 5% position in XYZ fund may now be 6% in real money terms and may impact portfolio performance more than a 5% position. Since the conversion, we show the actual percentage allocation to funds as well as the original target allocation on the Powerfund Portfolio pages.
Prior to our real money conversion, we used the official portfolio allocation multiplied by each fund’s monthly performance figure, which had the effect of rebalancing each fund to the official allocation each month. However, monthly rebalancing with a real money portfolio is costly and impractical due to commissions, short-term redemption fees and/or taxes.
Prior to our conversion to real money, we also did not calculate daily returns for the model portfolios, instead relying on monthly return figures (with dividends) provided by the fund companies and third-party providers for the funds owned, performance data we believe to be accurate but could contain errors. Since our real money conversion, the daily performance figures posted on our websites have been calculated based on actual account and position value changes.
The long-term chart displays month-end values instead of daily figures, since we've found that the granularity of daily chart data formats poorly when displayed online, and retrieving a data set of that size can also slow page load time for our users. In addition, we do not have daily portfolio values before 7/1/2010.
All quoted portfolio performance figures outside of our charts use daily data for time periods following our conversion to real money. Data points that include time periods before the availability of daily performance data (7/1/2010) use month-end data for the inception date, such that a 10-year return figure as of 2/15/2014 is actually calculated from 1/31/2004 to 2/15/2014. A 3-year return as of 2/15/2014 is calculated based on a start date of 2/15/2011 (give or take a few days for possible stock market holidays or weekends) through 2/15/2014.
Investors following the model portfolios may have achieved different returns, either higher or lower, than our quoted returns, based on the date they purchased the portfolios and/or the amount of deviation in their allocation percentages from the ones used to calculate model portfolio performance. While we did not get hit by any short-term redemption fees by mutual funds or brokerage platforms, those who owned a fund for a shorter time period may have, and therefore experienced lower returns.
Past performance is not a guarantee or an indicator of future results. Future market events may cause significantly more downside than experienced in the past. Investing in the stock and bond markets, even through diversified mutual funds, is risky; investments may be worth more or less than the original cost when sold. Portfolios that invest in mutual funds are not FDIC-guaranteed and will fluctuate in value. Investing in funds that invest in foreign domiciled securities may involve heightened risk due to currency fluctuations and economic and political risks, which can be enhanced in emerging markets. The MAXadvisor Powerfund Portfolios are not personalized investment advice, nor do they take your personal risk tolerance and financial situation into consideration.