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TOEWS
Mission: Improving Investor Outcomes
Dan Kullman
Regional Vice President
1063625a MK
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Disclosure
This presentation is intended for the dissemination of general information and should not be construed by any consumer
and/or prospective client as a solicitation to effect, or attempt to effect transactions in securities, or the rendering of
personalized investment advice for compensation.
Toews Corporation does not make any representations or warranties as to the accuracy, timeliness, suitability,
completeness, or relevance of any information prepared by any unaffiliated third party and takes no responsibility for
such content. All such information is provided solely for convenience purposes only.
Investments in securities, including mutual funds and Exchange Traded Funds, involves risk of loss of income and principal.
Investors should consider carefully information contained in the mutual fund prospectus, including investment
objectives, risks, charges and expenses. You can request a mutual fund prospectus for any of our funds.
While we believe the outside data sources cited to be credible, we have not independently verified the correctness of any
of their inputs or calculations and, therefore, do not warranty the accuracy of any third-party sources or
information.
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Unconstrained Tactical
Constrained Tactical
Equity
Toews All Equity
Toews Defensive Alpha
Equity
Fixed Income
4 Core Strategies
Toews High Income
Toews Diversified
Fixed Income
“Unconstrained Tactical” refers to those of our strategies that go completely to cash or are completely invested in the market.
“Constrained Tactical” refers to those of our strategies that remain invested in the capital markets, although they may move to a less volatile part of the market.
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11 Models
Mandate 1*
Mandate 2*
Mandate 3*
Defensive Alpha
Equity
Defensive Alpha
Balanced
Conservative Income
Moderate Income
Capital Preservation
Balanced Income
Balanced
Balanced Growth
Growth
All Equity
High Income
*The mandates shown refer to FTJ Fundchoice’s categorization of advisors on their platform.
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Mandate 2: Toews All Equity
Past performance is no guarantee of future results. All investments involve risk, including the potential loss of principal invested. The use of Toews does not eliminate risks associated with investing. Consider the investment
objectives, risks, charges, and expenses carefully before investing. The investment return and principal value of an investment will fluctuate. The investor’s account may be worth less than the original investment when
liquidated. The returns were obtained in an unusual market which may not occur again. See Disclosures beginning on page 27.
For investment professional use only
Mandate 2: Toews All Equity
Past performance is no guarantee of future results. All investments involve risk, including the potential loss of principal invested. The use of Toews does not eliminate risks associated with investing. Consider the investment
objectives, risks, charges, and expenses carefully before investing. The investment return and principal value of an investment will fluctuate. The investor’s account may be worth less than the original investment when
liquidated. The returns were obtained in an unusual market which may not occur again. See Disclosures beginning on page 27.
For investment professional use only
TDAE Disclosures
The Toews Defensive Alpha Equity Model shown does not reflect performance of any given account or group of accounts managed by Toews. As such, the model’s results are inherently limited in their meaningfulness to the
extent that they do not represent actual trading. Actual client accounts may have had different results from those of the model, based on various factors including specific investment objectives and availability of certain
instruments on a particular investment platform.
The inception date of the Toews Defensive Alpha Equity Model is 05/09/2014. Any results shown prior to that date were achieved by a retroactive application of the model. This hypothetical performance was calculated
by applying the historical trade dates of the Toews All Equity portfolio (fka Toews Aggressive Growth portfolio). Such hypothetical or simulated performance results do not represent the results of actual trading using client
assets, but were achieved by means of retroactive application of a backtested model that was designed with the benefit of hindsight. The performance results are hypothetical and should not be considered indicative of the
skill of the adviser. Material market or economic factors have not been considered because our system is technical and doesn’t change based on these factors. The performance information was compiled after the end of the
period depicted and does not represent the investment decisions of the adviser.
The Toews Defensive Alpha Equity Model is based on switching between a broad basket of equity index stocks or their ETF or equity index futures contract equivalent and the component stocks of the S&P Low Volatility
Index during certain periods of time. The Toews Defensive Alpha Equity Model is based on tracking the following benchmarks and allocations:
3/31/1996-05/08/2014 tracking the following:
Russell 2000 Index and alternating with S&P 500 Low Volatility Index
S&P 400 Mid Cap Index and alternating with S&P 500 Low Volatility Index
S&P 500 Index and alternating with S&P 500 Low Volatility Index
Nasdaq 100 and alternating with S&P 500 Low Volatility Index
MSCI EAFE and alternating with S&P 500 Low Volatility Index
05/09/2014 to 01/08/2016 tracking the following:
Vanguard Small Cap Growth ETF (VBK) and alternating with PowerShares S&P 500 Low Volatility ETF (SPLV)
Vanguard Mid-Cap Growth ETF (VOT) and alternating with PowerShares S&P 500 Low Volatility ETF (SPLV)
Vanguard Growth ETF (VUG) and alternating with PowerShares S&P 500 Low Volatility ETF (SPLV)
Vanguard FTSE All-World ex-US ETF (VEU) and alternating with PowerShares S&P 500 Low Volatility ETF (SPLV)
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TDAE Disclosures, cont.
01/09/2016 to present tracking the following:
TTDAX—Toews Tactical Defensive Alpha Fund
NOPRX—Nuveen Symphony Low Volatility Equity I
SCAYX/MLVEX—Invesco Low Volatility Equity Yield Inv/BMO Low Volatility Equity I
The Toews Defensive Alpha Equity model invests mainly in vehicles that invest in equities.
Prior to 07/29/2015, the Toews Defensive Alpha Equity portfolio was referred to as the Toews Tactical Defense Aggressive Growth portfolio.
The Toews Defensive Alpha Equity Benchmark is comprised of 30 percent Morningstar Small Cap Growth, 20 percent Morningstar Mid-Cap Growth, 20 percent Morningstar Large-Cap Growth &
30 percent MSCI EAFE – rebalanced monthly.
For investment professional use only
Mandate 1: Toews Defensive Alpha Equity
Past performance is no guarantee of future results. All investments involve risk, including the potential loss of principal invested. The use of Toews does not eliminate risks associated with investing. Consider the investment
objectives, risks, charges, and expenses carefully before investing. The investment return and principal value of an investment will fluctuate. The investor’s account may be worth less than the original investment when
liquidated. The returns were obtained in an unusual market which may not occur again. See Disclosures beginning on page 7-8, 27.
For investment professional use only
Mandate 1: Toews Defensive Alpha Equity
Past performance is no guarantee of future results. All investments involve risk, including the potential loss of principal invested. The use of Toews does not eliminate risks associated with investing. Consider the investment
objectives, risks, charges, and expenses carefully before investing. The investment return and principal value of an investment will fluctuate. The investor’s account may be worth less than the original investment when
liquidated. The returns were obtained in an unusual market which may not occur again. See Disclosures beginning on page 7-8, 27.
For investment professional use only
THI Disclosures
The Toews High Income model shown does not reflect performance of any given account or group of accounts managed by Toews. As such, the model’s results are inherently limited in their meaningfulness to the extent that they
do not represent actual trading. Actual client accounts may have had different results from those of the model, based on various factors including specific investment objectives and availability of certain instruments on a particular
investment platform.
The inception date of the Toews High Income model is 10/2009. Any results shown prior to that date were achieved by a retroactive application of the model. The hypothetical performance prior to 10/10/2009 was calculated
by applying the historical trade dates of the high income portion of the Toews Growth strategy. Such hypothetical or simulated performance results do not represent the results of actual trading using client assets, but were achieved
by means of retroactive application of a backtested model that was designed with the benefit of hindsight. The performance results are hypothetical and should not be considered indicative of the skill of the adviser. Material market
or economic factors have not been considered because our system is technical and doesn’t change based on these factors. The performance information was compiled after the end of the period depicted and does not represent
the investment decisions of the adviser.
The Toews High Income model is based on switching between bonds and money market accounts during certain periods of time. The Toews High Income model is based on tracking the following benchmarks and allocations:
3/31/1996-10/9/2009 tracking MLHY and alternating with money market.
10/10/2009 to 6/18/2010, tracking HYG and alternating with money market.
6/19/2010 to 3/31/2015 tracking THHYX
3/31/15 to present tracking THHYX THGWX and TUIFX
MLHY is the Bank of America Merrill Lynch U.S. High Yield Master II Index.
HYG is iShares iBoxx $ High Yield Corporate Bond ETF
THHYX is the Toews Hedged High Yield Bond Fund
THGWX is the Toews Hedged Growth Allocation Fund
TUIFX is the Toews Unconstrained Income Fund
The Toews High Income portfolio invests mainly in vehicles that invest in high yield bonds.
The Toews Dynamic Fixed Income (TDFI) High Income Strategy Benchmark is the Merrill Lynch U.S. High Yield Cash Pay Index. Prior to 2013 the benchmark was the Merrill Lynch U.S. High Yield Master II Index.
For investment professional use only
Mandate 3: Toews High Income
Past performance is no guarantee of future results. All investments involve risk, including the potential loss of principal invested. The use of Toews does not eliminate risks associated with investing. Consider the investment
objectives, risks, charges, and expenses carefully before investing. The investment return and principal value of an investment will fluctuate. The investor’s account may be worth less than the original investment when
liquidated. The returns were obtained in an unusual market which may not occur again. See Disclosures beginning on page 24.
For investment professional use only
Mandate 3: Toews High Income
Past performance is no guarantee of future results. All investments involve risk, including the potential loss of principal invested. The use of Toews does not eliminate risks associated with investing. Consider the investment
objectives, risks, charges, and expenses carefully before investing. The investment return and principal value of an investment will fluctuate. The investor’s account may be worth less than the original investment when
liquidated. The returns were obtained in an unusual market which may not occur again. See Disclosures beginning on page 24.
For investment professional use only
Constructing Portfolios for Multiple Market Cycles
Strategy Blending Allows You To….
1. Remove the burden of trying to predict which direction the market will move.
2. Identify a component in the portfolio that will benefit from each Market Cycle.
3. Keeps you and your client focused on Investing for the long term through
varying market cycles, INSTEAD of focusing on year to year returns.
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Constructing Portfolios For Multiple Market Cycles
Step 1: Asset Class Diversification
Bonds are a form of Risk
Mitigation providing
additional capital to
rebalance into equities
during declining markets.
Bond,
50%
Stock,
50%
For investment professional use only
Constructing Portfolios For Multiple Market Cycles
Step 1: Strategy Diversification
Tactical/Hedged Equity
Strategies and Long Only
Equity Strategies will typically
maintain their low correlation
so Maintain Equal Weighting
between them.
Hedged
Equity,
25.00%
Fixed
Income,
50.00%
Long Only
Equity,
25.00%
For investment professional use only
Constructing Portfolios For Multiple Market Cycles
Step 3: Manager Diversification
A Fixed
Income
Strategy,
25.0%
Toews All
Equity,
12.5%
XYZ
Tactical,
12.5%
Find Managers within each strategy that
have unique investment disciplines that
will complement each other with different
strengths and weaknesses in different
market environments.
Toews
Defensive
Alpha,
12.5%
Toews High
Income,
25.0%
ABC Long
Only
Strategy,
12.5%
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Recency Bias At Work
2009: Investor Conversation with Financial Advisor
“My primary concern is that my portfolio never goes down with the
market again during a correction. Big returns are not important!”
2014: Investor Conversation with Financial Advisor
“Why didn’t my portfolio do better than the S&P 500 Index?”
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Unprecedented Period of Low Interest Rates
Unprecedented
period of low
interest rates
The Federal Funds Rate is the interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution overnight. The federal funds rate is generally only applicable to the most creditworthy
institutions when they borrow and lend overnight funds to each other. Accessed
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The Buffett Indicator
The Buffet Indicator (or Market Cao to GDP Ratio) is a ratio used to determine whether an overall market is undervalued or overvalued. The ratio can be used to focus on specific markets, such as the U.S. market, or it can be applied to the
world market depending on what values are used in the calculation.
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PEG Ratio
%
Years
.
*Price to earnings relative to consensus 5-year Long Term Expected Growth Forecast.
The price/earnings to growth ratio (PEG ratio) is a stock's price-to-earnings ratio divided by the growth rate of its earnings for a specified time
period. April 27, 2016 Valuation: S&P PEG Ratio. Source Yardeni Reaserch Inc.
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Margin Usage at All Time Highs
Years
Source: Advisor perspectives January 28 th 2016; Additional Definitions: Margin Debt is the dollar value of securities purchased on margin within an account.
For investment professional use only
Number of Down Jones Draw Downs Per Decade
YEARS
NUMBER OF BEAR MARKETS
DJIA PERCENTAGE DECLINE
1900’s
1910’s
1920’s
1930’s
1940’s
1950’s
1960’s
1970’s
1980’s
1990’s
2000’s
3
2
1
4
1
1
2
2
2
2
2
-49%, -46%, -33%
-47%, -40%
-89%
-52%, -37%, -23%, -23%
-24%
-19%
-37%, -27%
-45%, -27%
-36%, -24%
-21%, -19%
-54%, -38%,
Average Bear
Markets/Average Loss
2.0
-37%
Past performance is not a guarantee of future results. . Source- Stock Traders Almanac.com .See Glossary page for definition of the Dow Jones on page 27.
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Gains Needed to Breakeven
Amount of Loss
Return Required to Breakeven
# of Years to Breakeven with
Annual Return of 10%
-10%
11.1%
1.1
-15%
17.7%
1.7
-20%
25.0%
2.3
-25%
33.3%
3.0
-30%
42.9%
3.7
-35%
53.9%
4.5
-40%
66.7%
5.4
-45%
81.8%
6.3
-50%
100.0%
7.3
*10 Years was chosen as a reference to the long-term annualized return of the S&P 500 Index
For investment professional use only
Annualized Returns can be Misleading
Half Gains / Losses
Full Gains / Losses
Starting Value
$100,000
$100,000
Year 1
-6%
-12%
Year 2
-11%
-22%
Year 3
14%
28%
Year 4
5%
10%
Year 5
3%
6%
Year 6
8%
16%
Year 7
4%
8%
Year 8
-19%
-38%
Year 9
13%
26%
Year 10
2%
4%
Ending Value
$108,161
$104,271
Average of Returns
1.3%
2.6%
This chart is for illustrative purposes only and are not representative of any specific investment or mix of investments.
For investment professional use only
Conclusion
1. Algorithm has never changed
2. 20 Year GIPS verified track record
3. Encouraging Long Only/Tactical diversification since 2006
4. Combo illustrations reports – Morningstar Direct
5. Behavioral economics based advisor materials
For investment professional use only
General Disclosures
Past performance is no guarantee of future results. All investments involve risk, including the potential loss of principal invested. The use of Toews does not eliminate risks associated with investing.
Consider the investment objectives, risks, charges, and expenses carefully before investing. The investment return and principal value of an investment will fluctuate. The investor’s account may be
worth less than the original investment when liquidated.
Toews Corporation (Toews/TC) is an SEC registered investment adviser with its principal place of business in the State of New Jersey.
This presentation is limited to the dissemination of general information pertaining to its investment advisory/management services.
The Toews All-Equity performance shown is gross and net performance of IRMS accounts from March 31, 1996 through February 28, 2006, and reflects gross and net performance of i-Vest
accounts from February 28, 2006 through June 30, 2016. The IRMS program generally consists of variable annuities contracts and is managed using available sub-accounts of the annuity.
Although investment strategies in both programs are the same, performance is shown for i-Vest after 2005 because it is a better expression of TC’s management capability and end-investor cost
(selection of investments is not as limited as with annuities, and annuities in IRMS may have a variety of insurance features that may increase cost significantly. The Toews All-Equity portfolio invests
mainly in equities and/or equity derivatives/futures.
Prior to 07/29/2015, the Toews All-Equity portfolio was referred to as the Toews Aggressive Growth portfolio.
The Toews All-Equity Benchmark is comprised of 30 percent Morningstar Small Cap Growth, 20 percent Morningstar Mid-Cap Growth, 20 percent Morningstar Large-Cap Growth & 30 percent
MSCI EAFE – rebalanced monthly.
Comparison of the Toews High Income model, Toews Defensive Alpha Equity model or Toews All-Equity composite to the “market”, benchmarks, or other portfolios is for illustrative purposes
only. Investors should be aware that the referenced benchmarks may have a different composition, volatility, risk, investment philosophy, holding times, and/or other investment-related factors that
may affect the benchmark’s ultimate performance results. There is no guarantee that the Toews model or any individual account will outperform any benchmark in any given market
environment. Toews portfolios are actively traded and thus are not tax efficient. Investors may incur additional tax liabilities as a result of investing in Toews portfolios.
Investors cannot invest directly in an index.
For additional information about Toews, including fees and services, send for our disclosure statement as set forth on Form ADV by writing to Toews at Toews Corporation, 1750 Zion Road, Suite
201, Northfield, NJ 08225-1844.
For investment professional use only
The S&P 500 Index (S&P) has been used as a comparative benchmark because the goal of the above account is to provide equity-like returns. The S&P is one of the world’s most
recognized indexes by investors and the investment industry for the equity market. The S&P, however, is not a managed portfolio and is not subject to advisory fees or trading
costs. Investors cannot invest directly in the S&P 500 Index. The S&P returns also reflect the reinvestment of dividends. Clients or prospective clients should be aware that the
referenced benchmark funds may have a different composition, volatility, risk, investment philosophy, holding times, and/or other investment-related factors that may affect the
benchmark funds’ ultimate performance results. Therefore, an investor’s individual results may vary significantly from the benchmark’s performance.
The Russell 2000 Index is a subset of the Russell 3000 equity index representing approximately 10% of the total market capitalization of that index. It includes approximately
2000 of the smallest securities based on a combination of their market cap and current index membership.
The S&P Mid-Cap 400 Index is a rules based index of mid-sized companies provided by Standard & Poor’s.
The NASDAQ-100 Index includes 100 of the largest domestic and international non-financial securities listed on The NASDAQ Stock Market based on market capitalization.
The MSCI EAFE Index is an index created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance of large and mid-cap securities in
developed markets in Europe, Australia and Southeast Asia, excluding the U.S. and Canada.
The S&P 500 Low Volatility Index is a rules based index of the 100 least volatile stocks in the S&P 500. The index benchmarks low volatility or low variance strategies for the U.S.
stock market. Constituents are weighted relative to the inverse of their corresponding volatility, with the least volatile stocks receiving the highest weights.
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The Dow Jones Industrial Average is an index that shows how 30 large publicly owned companies based in the
United States have traded during a standard trading session in the stock market. The DJIA is one of the most wellknown of the Dow Averages. The DJIA, however, is not a managed portfolio and is not subject to advisory fees or
trading costs. Investors cannot invest directly in the Dow Jones Industrial Average. The DJIA returns also reflect the
reinvestment of dividends. Clients or prospective clients should be aware that the referenced benchmark funds may
have a different composition, volatility, risk, investment philosophy, holding times, and/or other investment-related
factors that may affect the benchmark funds’ ultimate performance results. Therefore, an investor’s individual results
may vary significantly from the benchmark’s performance.
Bank of America Merrill Lynch US Cash Pay High Yield Index – The Bank of America Merrill Lynch US Cash Pay
High Yield Index has been used as a comparative benchmark because the goal of the above account is to provide
bond-like returns. The index is generally used to measure market performance of fixed-rate, coupon-bearing bonds
with an outstanding par of greater than or equal to $50 million, a maturity range greater than or equal to one
year and must be less than BBB/Baa3 rated but not in default.
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Loss Deviation: A measure of dispersion about an average which depicts how widely negative returns vary during the investment period
Standard Deviation (Std Dev): A measure of dispersion about an average which depicts how widely the returns vary during the investment period
Alpha: A measure of the difference between a portfolio’s actual returns and its expected performance, given its level of risk as measured by beta
Beta: A measure of systematic/market risk with respect to a benchmark. Measures the sensitivity of the fund’s excess return with respect to the benchmark’s excess
return that results from their systematic co-movement