Two out of three households in America - an estimated 65 million households- will probably fail to realize one or more of their major life goals.Provident Capital Management's Absolute Return Strategy utilizes sector and index no load mutual funds (both closed and open ended) and Exchange Traded Funds with the objective of increased returns over the general market indices. The benchmark for this account is the S&P 500 index. The portfolio objective is “Absolute Positive Returns”.
DIVERSIFICATIONThe PCM Absolute Return Strategy (PCM ARS) will have concentrated holdings of leading Indexes, sectors and or industry groups. Therefore, it will not be heavily diversified. It is expected that the client's PCM ARS accounts will hold two to four of the leading Indexes, sector or industry groups. It may, at any given time, hold up to 100% in one Index, Industry or sector. PCM may also use “bear market” funds (mutual funds or ETFs that go up when its underlying index declines). Additionally, this account may use long or short leveraged funds. It is anticipated that much of the accounts trading will be done in long or short leveraged mutual or Exchange Traded funds. Trades are entered as “batch” orders. Clients receive the average price of the batch order. For accounts held at the Rydex Family of Funds orders are placed at 10:30 am and/or at 3:30 pm. For accounts held at FolioFX, orders are placed at 11:00 am and/or 2:30 pm. Clients receive the posted price for the applicable time.
The firm’s founder, Michael Chapman, keeps a large percentage (+50%) of his personal investment capital in this strategy. His account will trade at Rydex Funds at the same time as clients in this strategy.
Explanation of Performance for PCM Absolute Return Strategy (PCM-ARS)
Provident Capital Management, Inc. is a fee only Registered Investment Advisor under the Investment Advisers Act of 1940. Its office is located at 11595 N. Meridian, Carmel, Indiana. PCM is defined as an independent investment management firm that is not affiliated with any parent organization. PCM manages client portfolios in separate accounts. PCMs ARS uses mutual funds and Exchange Traded Funds to positions clients’ accounts for both rising and falling markets.
I. Presentation Description
The performance numbers are the value-weighted, time-weighted, total return composite results of all fully discretionary PCM-ARS accounts held at the Rydex Funds custodian. Composite performance is measured on a monthly basis and linked to obtain the quarterly and annual results. New accounts are added as of their opening date. The composite includes all accounts held at the Rydex Funds custodian. Valuation at the end of each month is based upon prices provided by the custodian.
The Benchmark for the PCM-ARS Portfolio is the S&P 500 Total Return index. PCM believes that the S&P500 is a benchmark that is widely used and understood by the investment community. The ARS goal is to produce positive returns each year it does not have an investment goal of achieving returns that correlate with any particular benchmark over the long term. Valuations are computed in U.S. dollars. The dispersion of annual returns is measured by the standard deviation among asset weighted portfolio returns represented within the composite for the full year.
Performance results for the PCM-ARS net of fees include reinvested dividends, interest, custodial and trading fees and are presented after management fees.
Performance results for PCM Absolute Return Strategy Gross of Fees
|
|
Total Firm Assets |
Composite Assets |
# Accounts |
Dispersion |
PCM ARS Net |
PCM ARS Gross |
S&P 500 TR Index |
|
|
|
|
|
|
PCM Net |
PCM Gross |
S&P 500 TR Incex |
||||||||
|
2005 |
$64,900,640 |
$4,036,820 |
72 |
0.09% |
8.19% |
8.91% |
4.89% |
|
|||
|
2006 |
$72,189,638 |
$4,757,297 |
70 |
0.38% |
21.72% |
22.50% |
15.79% |
1 Year* |
-7.10% |
-6.25% |
19.23% |
|
2007 |
$ 78,743,487 |
$5,811,269 |
61 |
3.18% |
14.36% |
15.19% |
5.50% |
3 Year |
-3.71% |
-0.09% |
-24.06% |
|
2008 |
$68,206,100 |
$7,720,931 |
72 |
0.36% |
1.63% |
2.48% |
-37.00% |
5 Year |
34.03% |
40.90% |
-11.13% |
|
2009 |
$75,223,104 |
$8,598,001 |
82 |
0.07% |
1.98% |
2.89% |
26.45% |
|
*Trailing returns are provided as of 12/31/2010 |
||
|
2010 |
$72,536,521 |
$8,341,700 |
83 |
0.11% |
-7.10% |
-6.25% |
15.06% |
|
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The standard management fee schedule for the composite is 1.5% on accounts up to $2.5 million and 1% on accounts $2.5 million and higher. Actual investment advisory fees incurred by clients may vary.
This composite was created in January 2005. No alteration of composites as presented here has occurred because of changes in personnel or other reasons at any time. A complete list of firm composites and performance results is available upon request. This composite contains three non-fee paying accounts, which do not materially affect the composite performance.
II. IMPORTANT PERFORMANCE DISCLOSURES
1. Past Performance is no guarantee of future performance.
2. Individual account performance will vary
3. PCM gross returns do not reflect the payment of investment management fees
4. The ARS does use leveraged ETF’s that could enhance returns as well as losses
5. Performance on accounts not custodianed at Rydex Funds will vary from composite
III. INDEX DESCRIPTIONS
The S&P 500, a market-value weighted index of 500 stocks chosen for market size, liquidity and industry group representation is a non-managed index that does not accrue advisory or transactional expenses. Index performance data is sourced from the Standard & Poor Corporation. Market capitalization is the value of a corporation as determined by the market price of its issued and outstanding shares of common stock.
Shout if from the mountain tops.
What's the right portfolio for you or your clients? Provident Capital offers 4 portfolios that one can select that seek to replicate the risk and return characteristics of our Absolute Indexes. 
