Program A may be used as a complement to Program R. Program A is a systematic strategy that invests in individual stocks. SCM invests SDBAs, IRAs, and other brokerage accounts in a separate strategy, Program A. Using an SDBA may help increase returns further. Sprout Capital Management, LLC can manage SDBAs through a limited power-of-attorney that you provide to the broker custodian. An SDBA allows you to invest in a wide array of securities, such as individual stocks and exchange-traded funds (ETFs). An SDBA is held in trust for your employer plan at a broker custodian, such as Fidelity, Charles Schwab or TD Ameritrade. The following table lists the cumulative annualized return (AR) and maximum peak-to-valley drawdown (DD) for Program R, versus non-target-date funds in the plan, starting from July 2000:Ī self-directed brokerage option (SDBA), if your employer plan has one, is a flexible alternative to employer-selected mutual funds. Sprout Capital Management, LLC may help lower your risk. By comparison, ODMAX, the top-performing fund in the plan, experienced a 61.6% maximum drawdown. Since July 2000, Program R experienced a 17.8% maximum drawdown. We believe you are more likely to continue using a strategy if you know how it has performed in a backtest. (It is unlikely that you would have bought and held this fund and only this fund over that time frame, so your return is likely lower than 9.6% for a comparable period!) Sprout Capital Management, LLC may help increase your returns.Ī steep loss, also known as a drawdown, can be disruptive if you react to the loss by selling in panic. As a point of comparison, the best performing fund in DMG EQUIPMENT COMPANY LTD.’s plan is “Oppenheimer Developing Market”, proxied by the symbol ODMAX, which produced a 9.6% cumulative annualized return over the same time frame. Sprout Capital Management, LLC’s strategy, Program R, produced a 15.8% cumulative annualized return since July 2000 in its backtest using the funds in this plan.

Results are net of fund expenses and reflect re-invested dividends or distributions, but do not reflect other fees that may be levied by the employer plan. “Program R”/”SCM Strategy” reflects SCM’s management fee of 1%. The results are hypothetical results and NOT an indicator of future results and do NOT represent returns that any investor actually attained. The funds used by the backtest are shown in the column “Backtest Symbol” in the table below: If the plan’s funds do not have 10 years of history, SCM’s backtest uses funds from other providers with similar market exposure and similar bottom-line performance. Your employer’s funds represented by symbols in bold in the table above may not have enough history to perform a backtest. A backtest demonstrates how a strategy would have (hypothetically) performed in recent years. One feature of a rules-based strategy is the ability to “backtest”.

When the economy enters a recession, SCM will try to lower risk by reallocating among the plan’s lower-risk funds, such as bond funds. During stock bull markets, the strategy reallocates to the plan’s top-performing stock funds.

This strategy takes into account your particular circumstances, the stock market environment, and the nuances of your employer’s plan. SCM employs a systematic (rules-based) investment strategy, Program R, to perform this reallocation. SCM will help you regularly reallocate among these funds to manage risk and help maximize return. CASHX assumes an interest rate of zero, but the plan’s cash-equivalent fund may earn a little interest. Note that if the employee plan has a cash-equivalent fund or trust (with “Stable Value”, “Guaranteed”, “FDIC Insured”, “Money Market”, etc., in the fund description), then that selection will be represented by “CASHX” in the tables above.

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