AbsoluteCapital -- Our Programs -- The Capital Constructor

The Capital Constructor is designed for investors who want to position their assets for changing market conditions and generally remain fully invested, while not having to constantly monitor the markets and choose the investments themselves.

* There can be no assurance that the investment objective will be achieved or that Absolute Capital Management’s (ACM’s) strategies will be successful. ACM’s strategies are continually developing and evolving. While it is anticipated that ACM will invest primarily in exchange traded funds that represent the investment strategy discussed herein, ACM has broad and flexible investment authority. Therefore, there are no material limitations on the instruments or markets in which ACM may purchase or sell.

Diversified Portfolio Construction

The Capital Constructor offers four investment models based on risk tolerance profiles that guide portfolio construction. Ranging from income to growth, each model offers weightings among domestic equities, international equities and bonds (note: all models may not invest in all asset classes). The percentage allocations within each asset class are based upon the risk tolerance level of the model. You and your financial representative will determine the investment model that matches your investment objectives, as well as your willingness and ability to take risk. Over time, your goals and objectives may change, and you should work with us or your financial representative to determine if changes to your investment model are warranted.

For illustrative purposes only. Not intended to represent the actual percentages associated with any model.

The allocations in these charts represent targeted positions based within a tolerance range of +/- 10% and based on a fully invested portfolio on a platform. Various factors will impact an account’s actual percentage allocations, including but not limited to maintaining a cash position and investing in more or less than the targeted positions due to the Advisor’s discretion in areas such as model construction or security selection.

Dynamic Asset Class Rotation

Why Use Exchange Traded Funds (ETFs)?

...because they offer pure exposure to asset classes with generally lower internal fees than mutual funds.

In building an asset allocation strategy, using ETFs may be an efficient way to get “pure” exposure to the asset class – that is, a highly transparent basket of securities modeled after their index which are published and known to all market participants. Because of this, ETFs offer a highly transparent way to “buy the asset class,” making them an effective vehicle to use in implementing an asset allocation strategy. Further, without the mutual fund management team’s involvement, the internal fees of ETFs are often times significantly lower than that of their mutual fund counterparts.

The Capital Constructor features an “asset class rotation” strategy that selects and weights asset classes to position the portfolio for current market conditions. Based on the premise that not all investment styles move in lock step, The Capital Constructor’s rotation process utilizes investments primarily in ETFs to capture the areas of the market that we believe have the strongest characteristics for the period ahead according to our analysis.

Overweighting and underweighting among asset classes is used to tilt the portfolio. Among domestic equities, The Capital Constructor determines allocations across styles (value and growth) and market capitalization ranges (large-, mid- and small-caps) based on our analysis of current market conditions. For international equities, master geographic areas are analyzed (such as Europe, Asia, World, Japan, Foreign, and Emerging Markets). Similar analysis determines the most appropriate bond types for investment. Among the three master areas, investors are diversified in multiple asset classes generally totaling between 6-12 positions, dependent upon the program chosen. A small cash position will be held to accommodate various cash flow requirements.

Professional Security Selection

Distinctive to The Capital Constructor program is its implementation of the management strategy primarily through the use of exchange traded funds (ETFs) which offer a transparent way to invest in an asset class. With the exploding number and types of ETFs available in the market today, many investors may be overwhelmed with the choices. Sifting through the sea of available options requires time and research devoted to analysis. The Capital Constructor program benefits from Absolute Capital’s analytics to assess the vast array of investment options and make selections. And, while many types of asset allocation programs may make choices once and then forget about it, Absolute Capital knows that markets are dynamic and factors change. Security selection is not a “once-and-done” proposition. For that reason, each reallocation made in The Capital Constructor program relies on a comprehensive review of the current offerings within the ETF universe and other security types as applicable.