Kim Le Danny Lopez Gabriel Garcia SafeHands Mutual Fund Growing for the Future Who are we? What is our mission? • We are a group of financial investors that graduated through Wu teaching course institutions. • Our mission is to provide the greatest wealth for our investors. Asset Allocation & Portfolio Diversification -Asset Allocation Combining asset classes such as stocks, bonds, derivatives and cash in a portfolio in order to meet your goals. -Diversification Spreading portfolio assets over sufficient number of securities to avoid excessive risk from any one security. Over time, the major source of investment risk and return is based on the asset allocation decision. We are a planning to grow, so we are looking to get the highest return at the same time lowering our risk for our investors. Cash 3% Our Portfolio Allocation Bonds 22% Derivatives Securities 10% Equity 65% • Having a higher risk management fund, we plan to have a higher return. Although, if this ever turned out to not be the case. We have lowered our risk by diversifying our investments. • Our main focus when diversifying our investments is the correlation different companies have with one another. • With our offensive or aggressive investment strategy we will try to take advantage of a rising market by purchasing securities that are outperforming the market for a given level of risk and volatility. Another offensive strategy we will do is entailing options trading and margin trading. • Combining elements of both the defensive and offensive strategies. We have correlated both and turned it into a balanced investment strategy. • So how are we going to diversify our investments to lower the risks? Diversification From Combining Complete Diversification Investments Portfolio 2 No Diversification Investment C Portfolio 1 Investment A Investment D Investment B Some Diversification Portfolio 3 Investment E Investment F Our strategy will be The Chart Above. As we illustrated in the three charts, by diversifying our portfolio we are increasing our return, at the same time trying to have no volatility, (lowering the risk). 6 Constructio n/Home Building Industry 20% Equity Automobile Industry 15% Food & Baby Industry 41% Electronic Industry 24% Notice that a larger percentage of our investment will go to the food and baby industries. The reason for this is because if there were to be a financial crisis in the U.S. economy, most industries would go down. Although even with a crisis, babies are still being born, and people will still need there necessities, as in food. We would hedge our position by investing in food & baby industries. The food and baby industry is our defending assets. We have listed two defensive stocks, with their average rate of return in the past 3 yrs. - Johnson and Johnson (JNJ) , 750 shares. - Hormel Foods Corp (HRL), 1500 shares. 12.32%return 13.05%return Bonds Corporate Bonds 40% Municipal Bonds 10% U.S. Government Bonds 30% Agency Bonds 20% As you can see, we will be using a larger percentage of our allocated funds to invest in the higher quality Investing Grade Corporate Bonds. Corporate Bonds usually offer a higher return in comparison to U.S. Government bonds. Our two main bonds under the Corporate Bond Sector will be; We have listed the two Corporate Bonds with their average rate of return in the past 3 yrs. - Ishares (LQD) , 130 shares. 8.97%return - Vanguard Interm (VCIT), 300 shares. 9.07%return Another thing we can see from the graph provided above is that 30% of our bond investment is going to U.S. Government Bonds. U.S. Government Bonds and Treasuries have the lowest risk of all bonds, because it is guaranteed by the U.S. Governments “full faith and credit”, or in other words, its taxing authority. • Derivatives • We are allocating 10% in derivatives because we seek to help you get the greater portion of wealth overtime. • Derivatives can be used either for risk management ( to "hedge" by providing offsetting compensation in case of an undesired event, "insurance") or for speculation (making a financial "bet"). This distinction is important because the former is a legitimate, often prudent aspect of operations and financial management for many firms across many industries • Hedging also occurs when an individual or institution buys an asset and sells it using a futures contract. Why to invest with SafeHands Mutual Fund The three main reasons why to invest with SafeHands Mutual Fund 1. Opportunistic Approach The SafeHands Fund continually seeks the best investment opportunities within a broad set of asset classes to help the portfolio grow in value and create wealth for you over time. 2. Dynamic Risk Management The SafeHands Fund seeks to minimize risk by reducing volatility at the first sign of trouble in the markets, potentially helping you to keep a greater portion of wealth over time. 3. Investment Strategy Expertise The SafeHands Fund is managed by a team of certified expert investors. Taught under the Wu Strategic investment strategies learned at the University of Arkansas- Fort Smith.