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Mid-April, 2014: Conservative with continued exposure to utilities and heavy in bonds

The mid April reallocation remained conservative with continued exposure to utilities and heavy in bonds across the majority of PCM indexes. The PCM Global Tactical Index is now allocated 20% each to utilities, the Aussie dollar, preferred stocks, U.S. Treasuries and emerging market bonds. The Alpha One Index remained in U.S. preferred equities, as it has been for the majority of 2014. The PCM Commodities Index moved to a 50% allocation to natural gas and a 50% exposure to oil, a possible following of the money on the back of continued unrest in Ukraine. The PCM U.S. Industries Index hit another all time high at the end of March and holds 25% in each of medical devices, food and beverage, consumer staples and utilities, being an interesting mix of consumer "needs" vs "wants".

On the bond side, the PCM US Bond Index allocation changed slightly with 25% staying in each of high yield corporates, investment grade corporates, and 20+ year U.S. Treasuries. The remaining 25% moved to the longer end of the yield curve on U.S. Treasuries, specifically from the 1-3 year and into the 7-10 year.The PCM Absolute Bond Index held a 50% exposure to emerging market bonds, rotating the other 50% to 20 year U.S. Treasuries. As we wrap up the first quarter and begin performance reporting to the many research firms that track our index models, we look forward to seeing if we will be recognized as a top performer for Q1, 2014.

Due in part to the multi-directional ability of our indexes, the PCM Absolute Bond Index composite was again ranked as achieving "Top Guns" status within the Informa Investment Solutions' manager ranking database; this time for the 4Q 2013 after receiving the award in 2Q and 3Q 2013 as well. We are very proud to be able to offer the Absolute Bond Index as a solution to consider for clients who have maturing bonds or high exposure to a bond portfolio with a long duration. To view Morningstar Fact sheets of all of our index models updated through 12/31/2013, please visit our website at www.pcminvestment.com under the "indexes" tab.

By: Melissa Wieder, CFP®, Director Institutional Services

Collaborative insight provided by Co-CIO's Michael Chapman and Todd Wood.

The views and strategies described herein are for illustrative purposes only and may not be suitable for all investors. The information is not based on any particularized financial situation, or need, and is not intended to be, and should not be construed as investment advice or a recommendation for any specific PCM or other strategy, product or service. Investors should consult their financial advisor prior to making an investment decision. There is no guarantee that these investment strategies will work under all market conditions and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. This material contains the current opinions of the author(s) but not necessarily those of PCM and such opinions are subject to change without notice. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission. Provident Capital Management, Inc, PCM and Absolute Return Index are trademarks or registered trademarks of Provident Capital Management, Inc., in the United States.©2013, PCM.

About "PCM Quant Coalescence"

Welcome to Provident's bi monthly "Quant Coalescence" communication. We suspect that many of you are no different than us. That is to say that when our quantitative models rebalance every 2 weeks for some indexes or once a month for other indexes, you sometimes find yourselves asking "What is behind a rotation into that ETF?" This communication is our opportunity to "unite for a common end" with our clients and partners; keeping you updated on our thoughts and perspectives. As you know, our indexes are based on an absolute approach: we strive to make money in up markets or down markets, while trying to greatly minimize loss in any market environment.

Our indexes are also quantitative, reflective of our systematic, unbiased and technical approach. Since our indexes are unbiased, the quantitative models would obviously at times rotate into positions that cause us to scratch our heads. Nevertheless, being so close to the analysis as it unfolds, allows us to quickly begin to validate the fundamental reasons behind the quantitative "following of the money." At other times, the trades are not validated right away; the story unfolds as the days pass. We have been very excited about many of these "validations" and "ah ha" moments. We had another "ah ha" moment when we decided that these insights would also be interesting to those who have entrusted us with their financial peace of mind. Our goal is to be short and to the point, specific to what is happening in our indexes rather than a lengthy macroeconomic perspective.

April, 2014: Staples and Aussie in Play

The April reallocation shifted away from commodities and is biased to the "land down under", with exposure to New Zealand, Australia and the Aussie dollar as an emerging theme. Utilities and bond exposure also stayed in play across the majority of PCM indexes. The PCM Global Tactical Index is now allocated 20% each to New Zealand, Australia, the Aussie dollar, preferred stocks and utilities. The Alpha One Index remained in U.S. preferred equities, as it has been for the majority of 2014. The PCM Commodities Index gave up on gold in exchange for a 50% allocation to short term U.S. Treasuries, with the other 50% allocation remaining in livestock. The PCM U.S. Industries Index hit another all time high at the end of March and goes into April with 25% to each of medical devices, food and beverage, consumer staples and utilities, obviously being an interesting mix of consumer "needs" vs "wants".

On the bond side, the PCM US Bond Index allocation slightly changed with 25% staying in each of high yield corporates, investment grade corporates, and 20+ year U.S. Treasuries. The remaining 25% moved to the shorter end of the yield curve on U.S. Treasuries, specifically from the 7-10 year and into the 1-3 year.The PCM Absolute Bond Index now has a 50% exposure to emerging market bonds and 50% to international corporates.

Due in part to the multi-directional ability of our indexes, the PCM Absolute Bond Index composite was again ranked as achieving "Top Guns" status within the Informa Investment Solutions' manager ranking database; this time for the 4Q 2013 after receiving the award in 2Q and 3Q 2013 as well. We are very proud to be able to offer the Absolute Bond Index as a solution to consider for clients who have maturing bonds or high exposure to a bond portfolio with a long duration. To view Morningstar Fact sheets of all of our index models updated through 12/31/2013, please visit our website at www.pcminvestment.com under the "indexes" tab.

By: Melissa Wieder, CFP®, Director Institutional Services

Collaborative insight provided by Co-CIO's Michael Chapman and Todd Wood.

The views and strategies described herein are for illustrative purposes only and may not be suitable for all investors. The information is not based on any particularized financial situation, or need, and is not intended to be, and should not be construed as investment advice or a recommendation for any specific PCM or other strategy, product or service. Investors should consult their financial advisor prior to making an investment decision. There is no guarantee that these investment strategies will work under all market conditions and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. This material contains the current opinions of the author(s) but not necessarily those of PCM and such opinions are subject to change without notice. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission. Provident Capital Management, Inc, PCM and Absolute Return Index are trademarks or registered trademarks of Provident Capital Management, Inc., in the United States.©2013, PCM.

About "PCM Quant Coalescence"

Welcome to Provident's bi monthly "Quant Coalescence" communication. We suspect that many of you are no different than us. That is to say that when our quantitative models rebalance every 2 weeks for some indexes or once a month for other indexes, you sometimes find yourselves asking "What is behind a rotation into that ETF?" This communication is our opportunity to "unite for a common end" with our clients and partners; keeping you updated on our thoughts and perspectives. As you know, our indexes are based on an absolute approach: we strive to make money in up markets or down markets, while trying to greatly minimize loss in any market environment.

Our indexes are also quantitative, reflective of our systematic, unbiased and technical approach. Since our indexes are unbiased, the quantitative models would obviously at times rotate into positions that cause us to scratch our heads. Nevertheless, being so close to the analysis as it unfolds, allows us to quickly begin to validate the fundamental reasons behind the quantitative "following of the money." At other times, the trades are not validated right away; the story unfolds as the days pass. We have been very excited about many of these "validations" and "ah ha" moments. We had another "ah ha" moment when we decided that these insights would also be interesting to those who have entrusted us with their financial peace of mind. Our goal is to be short and to the point, specific to what is happening in our indexes rather than a lengthy macroeconomic perspective.

Mid-February, 2014: Quant analysis results in continued conservative stance

 

The mid February reallocation remained biased to the conservative and neutral side across the majority of PCM indexes. This was an extension of the more conservative positioning that has been in place in the indexes since mid-month January. The PCM Global Tactical Index is now allocated 20% each to 20 year U.S. Treasuries, utilities, healthcare, U.S. preferred equities and oil. The Alpha One Index remained committed to preferred shares in the U.S. equity markets, as it has been since mid January. The PCM Commodities Index is now long oil and coffee, exiting positions in livestock and natural gas.

On the bond side, the PCM US Bond Index allocation remained unchanged with 25% in each of high yield corporates, investment grade corporates, 7-10 year U.S. Treasuries, and 20+ year U.S. Treasuries. The PCM Absolute Bond Index saw 50% exposure remain in 20 year US Treasuries and 50% reallocated to international treasury securities.

Now for the news we had been waiting for....due in part to the multi-directional ability of our indexes, the PCM Absolute Bond Index composite was again ranked as achieving "Top Guns" status within the Informa Investment Solutions' manager ranking database; this time for the 4Q 2013 after receiving the award in 2Q and 3Q 2013 as well. We are very proud to be able to offer the Absolute Bond Index as a solution to consider for clients who have maturing bonds or high exposure to a bond portfolio with a long duration. To view Morningstar Fact sheets of all of our index models updated through 12/31/2013, please visit our website at www.pcminvestment.com under the "indexes" tab.

By: Melissa Wieder, CFP®, Director Institutional Services

Collaborative insight provided by Co-CIO's Michael Chapman and Todd Wood.

The views and strategies described herein are for illustrative purposes only and may not be suitable for all investors. The information is not based on any particularized financial situation, or need, and is not intended to be, and should not be construed as investment advice or a recommendation for any specific PCM or other strategy, product or service. Investors should consult their financial advisor prior to making an investment decision. There is no guarantee that these investment strategies will work under all market conditions and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. This material contains the current opinions of the author(s) but not necessarily those of PCM and such opinions are subject to change without notice. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission. Provident Capital Management, Inc, PCM and Absolute Return Index are trademarks or registered trademarks of Provident Capital Management, Inc., in the United States.©2013, PCM.

About "PCM Quant Coalescence"
Welcome to Provident's bi monthly "Quant Coalescence" communication. We suspect that many of you are no different than us. That is to say that when our quantitative models rebalance every 2 weeks for some indexes or once a month for other indexes, you sometimes find yourselves asking "What is behind a rotation into that ETF?" This communication is our opportunity to "unite for a common end" with our clients and partners; keeping you updated on our thoughts and perspectives. As you know, our indexes are based on an absolute approach: we strive to make money in up markets or down markets, while trying to greatly minimize loss in any market environment.
Our indexes are also quantitative, reflective of our systematic, unbiased and technical approach. Since our indexes are unbiased, the quantitative models would obviously at times rotate into positions that cause us to scratch our heads. Nevertheless, being so close to the analysis as it unfolds, allows us to quickly begin to validate the fundamental reasons behind the quantitative "following of the money." At other times, the trades are not validated right away; the story unfolds as the days pass. We have been very excited about many of these "validations" and "ah ha" moments. We had another "ah ha" moment when we decided that these insights would also be interesting to those who have entrusted us with their financial peace of mind. Our goal is to be short and to the point, specific to what is happening in our indexes rather than a lengthy macroeconomic perspective.

March, 2014: March Allocation sees Commodities in Play

The March reallocation sees commodities in play across the majority of PCM indexes. The PCM Global Tactical Index is now allocated 20% each to gold, oil, utilities, Belgium and Switzerland. The Alpha One Index also saw a rotation to commodities, as it committed to precious metals. The PCM Commodities Index maintained a position in coffee, with the other 50% allocation going into livestock. Coffee continues to do well, as the drought in Brazil has been driving the price higher. The PCM U.S. Industries Index hit another all time high at the end of February and is now allocated 25% to each of U.S. technology, semiconductors, REITS and utilities.

On the bond side, the PCM US Bond Index allocation remained unchanged with 25% in each of high yield corporates, investment grade corporates, 7-10 year U.S. Treasuries, and 20+ year U.S. Treasuries. The PCM Absolute Bond Index now has a 50% exposure to emerging market bonds and 50% to international corporates.

For the news we had been waiting for....due in part to the multi-directional ability of our indexes, the PCM Absolute Bond Index composite was again ranked as achieving "Top Guns" status within the Informa Investment Solutions' manager ranking database; this time for the 4Q 2013 after receiving the award in 2Q and 3Q 2013 as well. We are very proud to be able to offer the Absolute Bond Index as a solution to consider for clients who have maturing bonds or high exposure to a bond portfolio with a long duration. To view Morningstar Fact sheets of all of our index models updated through 12/31/2013, please visit our website at www.pcminvestment.com under the "indexes" tab.

By: Melissa Wieder, CFP®, Director Institutional Services

Collaborative insight provided by Co-CIO's Michael Chapman and Todd Wood.
The views and strategies described herein are for illustrative purposes only and may not be suitable for all investors. The information is not based on any particularized financial situation, or need, and is not intended to be, and should not be construed as investment advice or a recommendation for any specific PCM or other strategy, product or service. Investors should consult their financial advisor prior to making an investment decision. There is no guarantee that these investment strategies will work under all market conditions and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. This material contains the current opinions of the author(s) but not necessarily those of PCM and such opinions are subject to change without notice. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission. Provident Capital Management, Inc, PCM and Absolute Return Index are trademarks or registered trademarks of Provident Capital Management, Inc., in the United States.©2013, PCM.


About "PCM Quant Coalescence"
Welcome to Provident's bi monthly "Quant Coalescence" communication. We suspect that many of you are no different than us. That is to say that when our quantitative models rebalance every 2 weeks for some indexes or once a month for other indexes, you sometimes find yourselves asking "What is behind a rotation into that ETF?" This communication is our opportunity to "unite for a common end" with our clients and partners; keeping you updated on our thoughts and perspectives. As you know, our indexes are based on an absolute approach: we strive to make money in up markets or down markets, while trying to greatly minimize loss in any market environment.
Our indexes are also quantitative, reflective of our systematic, unbiased and technical approach. Since our indexes are unbiased, the quantitative models would obviously at times rotate into positions that cause us to scratch our heads. Nevertheless, being so close to the analysis as it unfolds, allows us to quickly begin to validate the fundamental reasons behind the quantitative "following of the money." At other times, the trades are not validated right away; the story unfolds as the days pass. We have been very excited about many of these "validations" and "ah ha" moments. We had another "ah ha" moment when we decided that these insights would also be interesting to those who have entrusted us with their financial peace of mind. Our goal is to be short and to the point, specific to what is happening in our indexes rather than a lengthy macroeconomic perspective.

February, 2014 PCM Quant Coalescence

The February reallocation completed Monday resulted in a continued migration to a more conservative and neutral stance across the majority of PCM indexes. This was an extension of the more conservative positioning that resulted from the mid-month January trading. The PCM Global Tactical Index moved very defensive; allocating 20% each to short term U.S. Treasuries, 20 year U.S. Treasuries, utilities, high yield corporates, with the only exposure to equities being the final 20% in U.S. preferreds. The Alpha One Index remained committed to PFF, a more conservative option of preferred shares in the US equity market. The Emerging Market Equity Total Return Index had an interesting January, as it held up very well; experiencing a fraction of the downside seen in the overall emerging markets. The new allocation in this index went 33% into inverse emerging markets. The U.S. Sectors Index also allocated 33% inverse the Dow Jones. As the Fed begins the taper, while macro-economic numbers are beginning to disappoint, the Fed members speaking in the last few days seem to be communicating a united front that such disappointing data will not derail the continuation of the taper. We will quickly know if that narrative changes, but for now taper continuation seems to be the definitive plan of action.

On the bond side, the PCM US Bond Index is 25% in each of high yield corporates, investment grade corporates, 7-10 year U.S. Treasuries, and 20+ year U.S. Treasuries. The PCM Absolute Bond Index saw 50% exposure to 20 year US Treasuries and 50% to inflation protected government securities. Due in part to the multi-directional ability of these indexes, the PCM Absolute Bond Index composite was again ranked as achieving "Top Guns" status within the Informa Investment Solutions' manager ranking database; this time for the 3Q 2013 after receiving the award in 2Q 2013 as well. We look forward to seeing if the index achieved the same status for the 4th quarter of 2013. The Absolute Bond Index continues to be a solution to consider for clients who have maturing bonds or high exposure to a bond portfolio with a long duration. To view Morningstar Fact sheets of all of our index models updated through 12/31/2013, please visit our website at www.pcminvestment.com under the "indexes" tab.

By: Melissa Wieder, CFP®, Director Institutional Services

Collaborative insight provided by Co-CIO's Michael Chapman and Todd Wood.
The views and strategies described herein are for illustrative purposes only and may not be suitable for all investors. The information is not based on any particularized financial situation, or need, and is not intended to be, and should not be construed as investment advice or a recommendation for any specific PCM or other strategy, product or service. Investors should consult their financial advisor prior to making an investment decision. There is no guarantee that these investment strategies will work under all market conditions and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. This material contains the current opinions of the author(s) but not necessarily those of PCM and such opinions are subject to change without notice. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission. Provident Capital Management, Inc, PCM and Absolute Return Index are trademarks or registered trademarks of Provident Capital Management, Inc., in the United States.©2013, PCM.


About "PCM Quant Coalescence"
Welcome to Provident's bi monthly "Quant Coalescence" communication. We suspect that many of you are no different than us. That is to say that when our quantitative models rebalance every 2 weeks for some indexes or once a month for other indexes, you sometimes find yourselves asking "What is behind a rotation into that ETF?" This communication is our opportunity to "unite for a common end" with our clients and partners; keeping you updated on our thoughts and perspectives. As you know, our indexes are based on an absolute approach: we strive to make money in up markets or down markets, while trying to greatly minimize loss in any market environment.
Our indexes are also quantitative, reflective of our systematic, unbiased and technical approach. Since our indexes are unbiased, the quantitative models would obviously at times rotate into positions that cause us to scratch our heads. Nevertheless, being so close to the analysis as it unfolds, allows us to quickly begin to validate the fundamental reasons behind the quantitative "following of the money." At other times, the trades are not validated right away; the story unfolds as the days pass. We have been very excited about many of these "validations" and "ah ha" moments. We had another "ah ha" moment when we decided that these insights would also be interesting to those who have entrusted us with their financial peace of mind. Our goal is to be short and to the point, specific to what is happening in our indexes rather than a lengthy macroeconomic perspective.

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