getting back on track - noload fundx

Jason Browne, CIOFundX Investment Group

AAII - PhoenixMarch 2013

Agenda• Background on FundX Investment Group• US Stock indexes are at all-time highs: our thoughts on

Equity Investing?– The role of stocks in a portfolio– Our perspective on risk/reward– Current Fund and ETF leadership

• What about Fixed Income?– Risk, opportunity and what we plan to do when rates rise

• If you have missed the rally, what can you do now?• Reality check (needs/resources = limited choices)

– The secret to long-term investment success

Established in 1969, FundX Investment Group (formerly DAL Investment Company) pioneered the use of noload mutual funds to professionally manage investment portfolios for clients.

Our performance is rooted in a systematic investment discipline known as Upgrading. This strategy allows us to be invested in the best performing mutual funds available – whatever the current market conditions.

We offer three services which provide access to the benefits of the Upgrading strategy.

• Private Accounts• NoLoad FundX Newsletter• Mutual Funds

Core Equity Portfolios

Risk Managed Portfolios

Flexible Income Portfolios

5

•Risk•Time•Resources•Preferences

Profile andObjectives

•Stocks•Bonds •Cash•Commodities•Alternatives

Asset Allocation• Process drives portfolio

•Portfolio is built fund-by-fund based on Upgrading

Equity Portfolio

•Global•Diversified•Flexible•Automatic

Equity Allocation

Upgrading Selection Process

86 YearsStocks, Bonds, Cash & Inflation

Stocks $2,936

Bonds $95

Cash $21

Inflation $13

Historical Expectations

Stocks (10% total return)

Bonds (6% yield)

Cash (3% yield)

Alternatives (8% total return)

S&P 500 - 16 Years to Mar 2013

86 YearsStocks, Bonds, Cash & Inflation

Stocks $2,936

Bonds $95

Cash $21

Inflation $13

Secular Bear Market 1966-1982

Secular Bull Market 1982-2000

Historical Expectations

Stocks (10% total return)

Bonds (6% yield)

Cash (3% yield)

Alternatives (8% total return)

More Realistic Expectations

Stocks (8-10% total return)

Bonds (2-3% yield)

Cash (0-1% yield)

Alternatives (5-10% total return)

As We Invest, it Helps to Acknowledge that…

Most people:1. Will NEED to spend some of their own money to supplement other

sources of income.2. Have limited RESOURCES.3. Can’t earn what they NEED without taking some RISK that will feel

uncomfortable at times.Because:4. Low risk investments often don’t return enough5. When they do return enough, higher risk assets are generally doing so

much better that they are hard to resist6. Higher returning investment are volatile7. Most investors lose confidence in their investment strategy when their

portfolio declines in value

Required Rate of Return (ROR)

NEED / RESOURCES = RORIf you earn less than ROR, you will eventually run out of RESOURCES.

Choices:• Try to earn ROR or greater return• Decide in advance how long your RESOURCES must

last• Reduce your NEED and/or increase your RESOURCES

Different Isn’t Always Better

NoLoad FundX Long Term Performance

Long-term outperformance always includes underperformance

-10%

-5%

0%

5%

10%

15%

20%

25%

Relative performance of Class 3 Upgrading for calendar years 1980 to 2010, from best to worst.

Flexible Income Allocation

32

Calendar Year Returns (Flexible Income managed portfolio for trailing 10 years)

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-40.00%

-20.00%

0.00%

20.00%

40.00%

15.78%

4.93%1.99%

8.56%4.99%

-0.23%

9.06% 7.54%

1.10%

7.23%

More Realistic Expectations

Stocks (8-12% total return)

Bonds (2-4% yield)

Cash (0-1% yield)

Alternatives (6-10% total return)

The Secret to Long-Term Investment Success

1. Use Realistic Assumptions– Return Expectations– Risk Tolerance– Investment Strategy

2. Set an Asset Allocation to Fund Your Goals– Beating Benchmarks is for Pros– Play the Hand You are Dealt

3. Be Disciplined and Act to Your Advantage– Rebalance– Monitor Your Results Vs. Your Assumptions– Follow a Plan

WWW.FUNDX.COM800-763-8639

Noload FundX Newsletter: $99 for 1 yearQuarterly Upgrader newsletter: Free

FundX Blog: Free

Mutual funds: www.upgraderfunds.comPrivate accounts: www.fundxinvestmentgroup.com