NDVR Growth with Embedded Alternatives™

1. We allocate 75% of your portfolio to your NDVR Personalized Indexing strategy.
2. We also allocate 125% exposure (of your portfolio’s net asset value) to our Hedged Enhanced Treasuries strategy.
3. To build the Hedged Enhanced Treasuries allocation, we first purchase U.S. 10-Year Treasury Note futures for your portfolio.
4. To protect your exposure to U.S. 10-Year Treasury Notes against extreme declines in value, we purchase put options on the U.S. 10-Year Treasury Note futures.
5. We then implement a short VIX^® futures overlay to provide credit exposure, targeting a set ratio of VIX^® futures contracts per dollar value of the portfolio.

NDVR Growth with Embedded Alternatives is an aggressive growth strategy.

The NDVR Growth with Embedded Alternatives Strategy is for:

• Investors with an aggressive risk profile,
• Investor looking for a higher expected return than a typical equity portfolio,
• Investors seeking a portfolio more diversified than one holding only equities,
• Or investors who are using our NDVR Lifestyle Protection strategy and want to increase the return potential of the portion of their portfolio allocated to growth.

The expected benefits of the NDVR Growth with Embedded Alternatives strategy include:

• Enhanced growth: This strategy seeks returns higher than would be expected for a typical equities-only portfolio, or a typical 60/40 portfolio.
• Risk-balanced: The strategy diversifies risk by allocating risk – not merely initial value invested –across stocks and bonds for a balanced portfolio.
• Favorable tax treatment: The Enhanced Treasuries allocation of the portfolio uses futures and options, which are taxed more favorably (as 1256 contracts) than bond coupons, which are taxed as ordinary income. The equity allocation (using our NDVR Personalized Indexing strategy) can benefit from automated tax-loss harvesting.
• Built-in protection: Options purchased to protect the U.S. 10-Year Treasury-Note futures exposure against extreme declines in value.

The NDVR Growth with Embedded Alternatives strategy takes advantage of the leverage embedded in U.S. 10-Year Treasury Note futures to provide balanced exposure to equity and fixed income risks.

Consider this familiar example of leverage. A person who buys a $1M home with a $200k down payment, has a 500% levered position. This is because the value of the asset they own (their home) is greater than the amount they invested. Leverage can be used in much the same way when investing in equities and bonds, allowing an investor to increase their exposure to these assets.

We use leverage in this strategy to seek enhanced returns while keeping the risk profile, measured as expected volatility, about the same as a 100% equity portfolio. We use options to protect this leverage from potential, extreme declines in the value of U.S. 10-Year Treasury Note futures.

When some investors hear leverage, they think of a margin loan, and some investors do employ leverage by borrowing against the value of securities they already own. We achieve leverage differently, by using the leverage embedded in futures and options contracts.

Leverage is embedded in futures and options contracts because typically investors only need to post a fraction of the value of the contracts when buying and holding them. The initial collateral the investor must post to buy and hold the contract is typically determined by the futures exchange (which provides an initial minimum requirement) and the futures clearing merchant (who may add additional collateral requirements).

We use these derivatives because their effective financing rates tend to be lower than the rates on traditional margin loans, making them more capital efficient.

In most scenarios, a diversified portfolio with modest leverage is expected to be less volatile than a concentrated, unlevered portfolio. However, extreme declines in the value of the assets in a portfolio present a risk to levered portfolios, and that risk is evident in the historical record.

To address this risk with respect to the U.S. 10-Year Treasury Note futures position, the strategy buys put options to protect against potential, extreme declines in value.

NDVR typically charges a tiered, annualized fee ("NDVR Fee") based on the market value of the assets we manage per household. This tiered pricing is charged as follows, based on total household assets:

• First $2M: 0.75%;
• Next $2M - $5M: 0.65%;
• Next $5M - $10M: 0.55%;
• Over $10M: 0.45%

We refer to this as the NDVR Fee. We charge the same fee for every strategy we offer, including NDVR Growth with Embedded Alternatives. We do not charge additional fees for a particular strategy or combination of strategies.

For more details about our services and fees, please see the disclosures at the bottom of this page or our brochure.

Our mission is simple: to give investors a better chance at better outcomes. By using advanced technology, our experienced investment team can build highly customized, intelligent, tax-efficient portfolios, all with remarkably low fees.

The cherry on top? Unlimited access to our fiduciary advisors who are here to help uncover your goals and challenges before developing your optimized plan and portfolio.

Learn more about How It Works.