T.I.P.S.: The Intelligent Portfolio Solution

INTRODUCTIONThe 3% DifferencePortfolio management is about adding value measured as “Alpha,” the portion of return attributable to investment management rather than the market movement.Consider a market that averages a return of 7% over 40 years. In that scenario, $1 becomes nearly $15. Add 3% in additional return of Alpha from manager performance and that $1 investment now compounds to more than $45. Just3% a year of extra return, or Alpha, and over 40 years of investing the results are multiplied three fold. But what if the market returns average only 4% a year? At 4%, $1 grows to be $5 over 40 years. Add 3% of Alpha and the resulting $5 is tripled to almost $15.Numerous independent studies repeatedly demonstrate the fact that the individual investor will underperform the market. Not by just a little, but by a substantial amount, from studies by Dalbar, Inc.1 that indicate an average cost of 6% annually to as much as 17% in some exchange-traded funds in studies quoted by John Bogle.The truly sad part is that it does not have to be that way. Provided with the right tools and a prudent process founded upon an articulated investment policy, individual investors can outperform the market, reducing the investing risk at the same time.The Intelligent Portfolio Solution will show you how one portfolio manager has managed to do just that, adding the 3% Alpha difference over the long term. It will also show you how you can do the same, in a manner tailored to your own individual investment objectives and risk tolerances.