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The ISA Advantage

A commitment to active risk management and a global pursuit of index-linked returns across the asset spectrum underpins an investment philosophy that is the hallmark of the Index Strategy Advisors advantage.




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1. Dynamic Asset Allocation Makes a Difference

Our disciplined approach helps to avoid performance impairing volatility.

Our focus on asset allocation is dynamic and based

on a quantitative framework that continually

analyzes the unique catalysts and drivers of

performance for each investment sector. Given the

general efficiency of the capital markets, we

exclude all stocks from investment consideration.

Our 100% index-focused approach combines

opportunistic tactical investing by identifying index-

linked asset classes, where relative over- and

under-valuation exist, with strategic and

incremental investing in sectors expected to

outperform over longer periods of time.




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1. Dynamic Asset Allocation Makes a Difference: ISA vs. Traditional Managers

Compare ISA to traditional investment manages to see how we're different.




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2. Rigorous Research

We are focused on furthering understanding of the drivers of risk and opportunity in the New Era of investing.

The foundation of our research is a

powerful algorithm library. Our research

methods are at the forefront of

technology, adaptive, and based on the

new realities of extremely volatile and

intricately interconnected global

financial markets.




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Global awareness is critical to measure and understand the true scope of risk.

With the development in

the liberalization of capital

movements and the

securitization of stock

markets, international

financial markets have

become increasingly

interdependent. ISA

algorithms perform

surveillance on global

markets 24 hours a day, 7

days per week.




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Global awareness is critical to measure and understand the true scope of risk.

With the development in

the liberalization of capital

movements and the

securitization of stock

markets, international

financial markets have

become increasingly

interdependent. ISA

algorithms perform

surveillance on global

markets 24 hours a day, 7

days per week.




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For the first time in over 70 years, 2000-2010 challenged investor expectations of "normal returns.”




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For the first time in over 70 years, 2000-2010 challenged investor expectations of "normal returns.”




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Relative to prior post-correction rallies, the current recovery is robust.

Though immensely disruptive across all

global markets, the financial crisis has

passed. In capital market terms, the

global markets have recovered and shown

tremendous resilience compared to prior

recession recoveries. ISA is committed to

identifying the sectors and regions which

will lead the recovery and advance into

the next decade. Compared with prior

recoveries, the current rebound ranks

among the strongest.




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Looking forward, experts disagree on the range of potential returns.

The range of global stock market

returns is not obvious and

underscores our focus on analyzing

the real drivers of opportunity and

risk. In the current post-crisis

environment, we believe that an

investment manager’s best strategy

for generating sustainable returns is

to manage client portfolios more

actively and switch between assets

and asset classes when necessary or

opportune, according to where the

risks are lowest or the potential

returns most attractive.




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3. Global Diversification & Asset Allocation

ISA portfolios are constructed and managed with carefully screened, index-linked ETF securities.

Investment portfolios should be built around a

strategic and long-term approach. However, as

markets fluctuate and risks and opportunities

emerge, sometimes dramatically, it is prudent to

account for them when establishing an asset

allocation policy. Through global diversification

and dynamic asset allocation, ISA portfolios are

designed to help investors navigate significant,

unstable movements in financial markets,

following a path to potentially increased returns,

all while managing risks through a disciplined

process.




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ISA monitors international conditions where emerging markets are playing a much larger role in the global economy.

The developed markets generally

have greater exposure to emerging

markets than at anytime previously.

We believe that a longer-term

consequence may be higher volatility

in investment portfolios, given that

emerging-market economies tend to

be more volatile than mature

economies.




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economies.




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economies.




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economies.




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4. A Disciplined Investment Process

The ISA investing process integrates protection and growth objectives.

The ISA investment process achieves

growth and protection and is built on a

three step process: Downside Risk

Management, Portfolio Optimization, and

Compound Growth. The achievement of

these three areas of focus is possible

because of the integration of the

components within each objective: Capital

Preservation, Situational Logic, Multifactor

Risk Management, and Enhanced Return

each blend functionality with the larger

objectives.




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4. A Disciplined Investment Process: Downside Risk Management

Capital Preservation: A two-decade pattern of low volatility has been broken.

Today's markets, coupled with the

economic information within them, move

faster than any other time in history. These

movements are both volatile and

correlated. Co-movements across

international economies and asset classes

are exacerbated by excess volatility,

exposing

portfolio holdings to risk at greater levels

than ever before. Not only have the rules of

investing changed, but the tools necessary

to manage an investment portfolio have

changed forever as well.




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exposing









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exposing









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exposing









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Capital Preservation: The difficulty of recovering losses makes capital preservation a priority.

The timing of corrections, market shocks,

price dislocations, and other macro events

may be impossible to predict; but are

persistent in their recurrence. Such events

reveal massive data, that in our view,

inform a statistically meaningful risk-

reward trade-off assessment in portfolio

allocations. We introduce a level of

downside risk

management through dynamic asset

allocation based on these data, events and

or specific market conditions that reflect

the optimal risk/reward balance for the

expected returns of portfolio holdings.




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ISA employs situational logic to inform a prudent response to market shocks.

Every market correction is unique, or unique enough that many investors are unprepared when

the market turns. We leverage historical risk factor interactions which translate to the present,

and monitor the strongest factor interactions within these pairings for objective confirmation of

a downtrend. As our market assessment improves or deteriorates, risk is reduced or assumed

accordingly.




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Situational Logic: ISA portfolios are managed for each client's needs and situation.

ISA algorithms locate information to determine how price trends may occur and the magnitude

of their consequences amid a constantly evolving investment environment; however, algorithms

do not make investment decisions. We integrate human temporal logic by intellectually

exploring the full space of possible outcomes for a given situation and sequence, fully

considering the breadth of pitfalls or opportunities inherent to the present environment and

client situation.




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Multifactor Risk Management: Macro risk factor exposure by ISA portfolios reflect multiple dimensions of risk.

Differences in market exposures to compensated

risk factors largely explain the returns between

investors. By applying multi-dimensional regression

analysis, ISA algorithms can analyze which

market/macro asset classes the portfolios are most

exposed to (e.g. oil, commodities, interest rates,

currencies, other financial markets, industry

sectors, etc.) and weigh heaviest in influencing

risk. Risk factor analysis calculates the exposure to

a provided set of parameters, while risk factor

screening finds the parameters that best describe

the portfolio

performance.




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Beta Factoring: Keen awareness of co-movement levels increases risk management effectiveness.

No investment program can predict or control the direction of the markets. Achievement of outstanding returns is predicated on what is within investors’ reach. Beta refers to an inherent sensitivity to the Large Cap U.S. Equity Markets. Since equity market movements are generally recognized to represent ‘beta’, beta factoring describes the process for determining which securities move in tandem with equities and to what degree a specified investment may exceed the performance (or underperformance) of a specific index (e.g. S&P 500). When powerful trends unfold, selection of investments based on beta factor can provide correlated, yet excess performance of a given benchmark. Appraisal of beta and beta drift for all ISA investment candidates serves as a measure of vulnerability to equity, volatility, and scoring of the potential magnitude of expected returns. For this reason, the vast new supply of sector, regional, and commodity ETFs have enhanced return potential for ISA clients so excess market returns and improved risk management are newly within reach.




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ISA risk factors support real-time data-driven analysis.

To be useful, a risk model must be effective at identifying important interactions between risk

factors. ISA risk analyses calculate a set of traditional market risk measures on overall portfolios as

well as drill down into asset classes, security types, regions/countries, sectors, individual securities

and the interactions among them. The calculations involve advanced mathematical models that

adapt to the current trading environment.




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Efficient cost containment generates enhanced return.

ISA employs a two tiered trading structure to execute orders for client portfolios: Commission-Free

Window Trading, and Real-Time Market Trading with direct links to major trading venues.

Our most cost-effective trading method is a patented, commission-free window trading system. Our window trades are an innovative way to fill

orders efficiently for long term investors. Instead of being executed immediately, window trades are grouped together twice a day for

execution, matched internally when possible, and any remaining orders are then sent to the market. Our commission-free window trading

system saves our clients time and money with advantages that include:

• Ability to buy and sell an entire portfolio in a single transaction.

• Unlimited trades with no commissions, no transaction fees, and no ticket charges.

• The ease of placing orders in dollar amounts rather than shares.

• Capability of buying and selling whole or fractional shares.

Window Trading




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Efficient cost containment generates enhanced return.

ISA employs a two tiered trading structure to execute orders for client portfolios: Commission-Free

Window Trading, and Real-Time Market Trading with direct links to major trading venues.

Real-Time Trading




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Unlike traditional investment strategies, Global Macro returns depend mostly on manager decisions.

Academic research and real world

performance results show that, in large and

efficient markets, the selection of individual

stocks does not reliably produce superior

uncorrelated returns. For these reasons, we

do not attempt to select individual stocks;

instead, we utilize asset class allocation

strategies to construct and manage broadly

diversified index linked portfolios. This

process is also categorized as a global

macro approach. Our skill, augmented by

our rigorous research, reflects investment

decisions that directly impact returns for

client portfolios.




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To learn more about how our investment capabilities can help you, please make an appointment by selecting:

TALK AN ADVISOR

at

www.indexstrategyadvisors.com

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