Mark Ukrainskyj, CFA®, AEPG Wealth Strategies - Speaker at the IFG Wealth Management Forum, held in Phoenix, AZ, delivered his presentation entitled Risk Management: Combining Strategic and Tactical Aprpoaches to Investment Management

1. Risk Management: Combining Strategic and
Tactical Approaches to Investment Management
Mark Ukrainskyj, CFA
IFG Wealth Management Forum
April 24, 2012
AEPG Wealth Strategies
25 Independence Blvd
“Consistently Good Advice in a Constantly Changing World”™ Warren, NJ 07059
908-757-5600
www.aepg.com

2. Risk Management: Combining Strategic and Tactical
Approaches to Investment Management Mark Ukrainskyj
CIO
Disclosure AEPG Wealth
Strategies
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“Consistently Good Advice in a Constantly Changing World”™

3. Risk Management: Combining Strategic and Tactical
Approaches to Investment Management Mark Ukrainskyj
CIO
Agenda AEPG Wealth
Strategies
Define
Short History
Approach
Cases
“Consistently Good Advice in a Constantly Changing World”™

4. Risk Management: Combining Strategic and Tactical
Approaches to Investment Management Mark Ukrainskyj
CIO
Definitions AEPG Wealth
Strategies
Strategic
•a long-range plan for achieving
something or reaching a goal, or the
skill of making such plans
Tactical
•done in order to get a particular result
“Consistently Good Advice in a Constantly Changing World”™

5. Risk Management: Combining Strategic and Tactical
Approaches to Investment Management Mark Ukrainskyj
CIO
Traditional Stock Diversification AEPG Wealth
Strategies
US Stocks International Stocks
Large Large Large
Large
Value Core Growth
Mid
Mid Value Mid Core Mid
Growth
Small Small Small
Small
Value Core Growth
“Consistently Good Advice in a Constantly Changing World”™

6. Risk Management: Combining Strategic and
Tactical Approaches to Investment Management Mark Ukrainskyj
CIO
Traditional Portfolio Diversification AEPG Wealth
Strategies
Stocks Bonds
“Consistently Good Advice in a Constantly Changing World”™

7. Risk Management: Combining Strategic and
Tactical Approaches to Investment Management Mark Ukrainskyj
CIO
AEPG Wealth
Updated ‘Traditional’ Portfolio Diversification Strategies
Stocks Bonds
REITS/ Alternatives
Commodities
Real Estate
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8. Risk Management: Combining Strategic and
Tactical Approaches to Investment Management Mark Ukrainskyj
CIO
Return/Correlation vs. MSCI World 1/92 -6/08 AEPG Wealth
Strategies
14%
Hedge Funds
REIT's
12%
Commodities
Stocks
10%
Treasury Indexes Fund of Funds MSCI ACWI
Wilshire 5000 (Full Cap)
MSCI EAFE
8% MSCI EM (EMERGING MARKETS)
Russell 1000
Return
Russell 2000
High Yield Barclays Capital U.S. Aggregate
Corporates Barclays Capital U.S. Treasury: 1-3 Year
Barclays Capital U.S. Treasury: 7-10 Year
6% Barclays Capital U.S. Treasury: Long
BofA Merrill Lynch US Treasury Master
BofA Merrill Lynch US Corporate Master
BofA Merrill Lynch High Yield Master II
BofA Merrill Lynch Mortgage Master
Aggregate, Mortgages, Munis BofA Merrill Lynch Municipal Master
4% Dow UBS Commodity Index
Wilshire REIT
HFRI Fund of Funds Composite Index
HFRI Fund Weighted Hedge Fund Index
2%
0%
-0.2 0 0.2 0.4 0.6 0.8 1
Correlation vs. MSCI WORLD
Source: Zephyr
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9. Risk Management: Combining Strategic and
Tactical Approaches to Investment Management Mark Ukrainskyj
CIO
Return/Correlation vs. MSCI World 7/08 – 12/08 AEPG Wealth
Strategies
30%
Treasuries and Mortgages
20%
Treasury 1-3
10% Years
Aggregate
0%
MSCI ACWI
Munis Wilshire 5000 (Full Cap)
Corporates MSCI EAFE
MSCI EM (EMERGING MARKETS)
-10% Russell 1000
Return
Hedge Funds and FoF's Russell 2000
Barclays Capital U.S. Aggregate
Barclays Capital U.S. Treasury: 1-3 Year
Barclays Capital U.S. Treasury: 7-10 Year
-20%
Barclays Capital U.S. Treasury: Long
Stocks & High Yield BofA Merrill Lynch US Treasury Master
BofA Merrill Lynch US Corporate Master
BofA Merrill Lynch High Yield Master II
-30% BofA Merrill Lynch Mortgage Master
BofA Merrill Lynch Municipal Master
Dow UBS Commodity Index
REIT's Wilshire REIT
HFRI Fund of Funds Composite Index
-40%
HFRI Fund Weighted Hedge Fund Index
Commodities
-50%
-60%
-0.6 -0.4 -0.2 0 0.2 0.4 0.6 0.8 1
Correlation vs. MSCI WORLD Source: Zephyr
“Consistently Good Advice in a Constantly Changing World”™

10. Risk Management: Combining Strategic and
Tactical Approaches to Investment Management Mark Ukrainskyj
CIO
2008 Returns for Market Indices (%) AEPG Wealth
Strategies
Fears of global
recoupling hurt
High quality fixed income US equities outperformed emerging markets
was the leader in 2008 non-US equities
FTSE/
Barclays Russell Russell EPRA
Barclays GS Barclays High Russell Russell Russell Mid Russell DJ Russell Mid Global MSCI
Muni ART High Yield 2000 Russell 1000 S&P Russell 1000 Cap 2000 Wilshire Mid MSCI Cap S&P Real Emerging MSCI
Agg Index Yield Muni Value 2000 Value 500 1000 Growth Value Growth RESI Cap EAFE Growth GSCI Estate Markets BRICs
Barclays Barclays 3
US Agg Month
Treasury T-Bill
Small caps:
equity leaders
despite the
turbulence After rallying in the first
half of the year, a
precipitous drop in oil
prices drove commodity
returns negative
Source: Bloomberg
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11. Risk Management: Combining Strategic and Tactical
Approaches to Investment Management Mark Ukrainskyj
CIO
Historical Returns AEPG Wealth
Strategies
When Stocks Fall, Government Bonds Usually Rise
U.S. Intermediate Government Bonds
S&P 500 Index
Years in which the S&P 500 showed a negative return
Source: Ibbotson Associates. Selected years shown represent all calendar years from 1929 to 2008 in which the S&P 500 Index had a negative total return. U.S. Intermediate-Term Government Bonds are represented by the 1-10 year U.S.
Government Bond Index. Past performance is not indicative of future results. Please note that indices are unmanaged and do not take into account any fees or expenses of investing in the individual securities that they track, and that individuals
cannot invest directly in an index.
“Consistently Good Advice in a Constantly Changing World”™

12. Risk Management: Combining Strategic and Tactical
Approaches to Investment Management Mark Ukrainskyj
CIO
Recent Historical Returns AEPG Wealth
Strategies
Index Performance
7/26/11 – 10/4/11
27.7%
4.3%
MSCI ACWIMI S&P 500 DJ UBS Commodity DJ REIT Index Intermediate Term Long Term
Index Treasuries Treasuries
-10.4%
-15.6% -14.7%
-21.5%
MSCI ACWIMI S&P 500 DJ UBS Commodity Index DJ REIT Index Intermediate Term Treasuries Long Term Treasuries
Source: Bloomberg and Ibbotson Associates
“Consistently Good Advice in a Constantly Changing World”™

13. Risk Management: Combining Strategic and Tactical
Approaches to Investment Management Mark Ukrainskyj
CIO
Tactical Diversification History AEPG Wealth
Strategies
Minimal Use
•Sector or Asset Class
Over/Under Weights
“Consistently Good Advice in a Constantly Changing World”™

14. Risk Management: Combining Strategic and Tactical
Approaches to Investment Management Mark Ukrainskyj
CIO
Portfolio Structure AEPG Wealth
Strategies
Low Risk Risk Based
US Treasury Core Equity Satellite
Income
Model Investments Investments
Tactical Short
Strategic Long Term
Term
“Consistently Good Advice in a Constantly Changing World”™

15. Risk Management: Combining Strategic and Tactical
Approaches to Investment Management Mark Ukrainskyj
CIO
Low Risk AEPG Wealth
Strategies
Treasuries - Low Risk
Bond Model with staggered maturities
Low Risk
Safe money
Provides cash flow for distribution
Treasuries will appreciate in value US Treasury
during periods of sharp decline in the Model
equity markets
Strategic Long Term
“Consistently Good Advice in a Constantly Changing World”™

16. Risk Management: Combining Strategic and Tactical
Approaches to Investment Management Mark Ukrainskyj
CIO
Risk Based AEPG Wealth
Strategies
Strategic Risk Based Assets
Income Investments
High Quality Income
Stream Risk Based
Investment Grade Spread
Investments
Core Equities
Core Equity
Low Cost Beta Exposure Income
Investments
Individual stocks
Exchange Traded Funds
(ETFs)
Tracks global equity index Strategic Long Term
Low cost third party
manager
“Consistently Good Advice in a Constantly Changing World”™

17. Risk Management: Combining Strategic and Tactical
Approaches to Investment Management Mark Ukrainskyj
CIO
Risk Based AEPG Wealth
Strategies
Tactical Risk Based Assets
Alpha Generation Risk Based
Risk Management
Possible Satellite Investments
Cash
Sector Funds Satellite
Country/Regional Funds Investments
Market Cap or Style ETF’s
Commodities
Alternative ETF’s Tactical Short
Term
High Yield Bonds
Investment Grade Bonds
US Treasuries & TIPS
“Consistently Good Advice in a Constantly Changing World”™

18. Risk Management: Combining Strategic and Tactical
Approaches to Investment Management Mark Ukrainskyj
CIO
Core Satellite AEPG Wealth
Strategies
Advantages
Satellite Satellite
Core Equities - Strategic
Low Cost
Broad Based
Tax Loss Harvesting
Satellite - Tactical
Satellite
Core Satellite
Flexible
Tactical
Concentrated
Risk Management
Hedging Satellite Satellite
“Consistently Good Advice in a Constantly Changing World”™

19. Risk Management: Combining Strategic and Tactical
Approaches to Investment Management Mark Ukrainskyj
CIO
Satellite AEPG Wealth
Strategies
Process
Set/Limit Number of Satellites
Research Possible Investments
Analyze Primary Drivers and Risks
Identify Specific Entry and Exit points
Set Risk Management Parameters
Execution/Discipline
“Consistently Good Advice in a Constantly Changing World”™

20. Risk Management: Combining Strategic and Tactical
Approaches to Investment Management Mark Ukrainskyj
CIO
Satellite AEPG Wealth
Strategies
Research
Qualitative
Quantitative
Technical
“Consistently Good Advice in a Constantly Changing World”™

21. Risk Management: Combining Strategic and Tactical
Approaches to Investment Management Mark Ukrainskyj
CIO
Satellite Example AEPG Wealth
Strategies
Satellite Activity
6/30/11 – 9/30/11
100%
90%
80%
Cash
70%
60%
Bonds
50%
40%
30%
20% Equity
10%
0%
Equity Bonds Cash
“Consistently Good Advice in a Constantly Changing World”™

22. Risk Management: Combining Strategic and Tactical
Approaches to Investment Management Mark Ukrainskyj
CIO
Satellite Example AEPG Wealth
Strategies
Risk Management Example #1
6/30/11 – 9/30/11
Source: Bloomberg
“Consistently Good Advice in a Constantly Changing World”™

23. Risk Management: Combining Strategic and Tactical
Approaches to Investment Management Mark Ukrainskyj
CIO
Satellite Example AEPG Wealth
Strategies
Risk Management Example #2
3/30/11 – 4/13/12
Source: Bloomberg
“Consistently Good Advice in a Constantly Changing World”™

24. Risk Management: Combining Strategic and Tactical
Approaches to Investment Management Mark Ukrainskyj
CIO
Summary/Benefits AEPG Wealth
Strategies
Structural Diversification
Risk Management
Low Costs
Alpha Generation
Tax Management
“Consistently Good Advice in a Constantly Changing World”™

25. Risk Management: Combining Strategic and Tactical
Approaches to Investment Management
Most Influential Advisors of
“ Defined Contribution
”
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for Dentists
by 401kWire
November 2010 “ Best Financial Advisors for Doctors
by Medical Economics Magazine ”
”
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April 2011
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by Financial Advisor Magazine
”
“ Top 100 Retirement
Plan Advisors in 2010
June 2010
“ New Jersey Top 401(k)
Defined Contribution Providers
by PLANADVISOR
”
January 2011
”
by NJ Biz
September 2010
“ Top 50 Wealth Managers
by AdvisorOne.com ”
“ Fastest Growing
Advisory Firms
June 2010
“ Top Wealth
”
by Investment Advisor Magazine Management Firms
2002 - 2009 ”
“ Top 5 RIA’s in NJ
by Reuters
Advice Point
”
by Wealth Manager Magazine
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