The program is an investment advisory program with continuous and regular supervision of investments by WS Wealth Managers Inc. using the advanced brokerage custodian platform provided by FOLIOfn Investments.

Combinations of stocks, exchange traded funds (ETF's), Closed End Funds (CEF's), as well as limited fixed income securities and mutual funds are combined into "model" FOLIO's designed to accomplish specific investment objectives. Subcriptions to certain combinations of FOLIO's and periodic modifications are designed to provide for superior risk management and an efficient and optimized form of Dynamic Asset Allocation custom tailored to each investor.

A "typical" portfolio in the program, analyzed using Morningstar Office software indicates a high degree of diversification with 1500 equity and 500 fixed income holdings. This level of diversification is possible, even in smaller accounts, in part because of the ability of the FOLIOfn platform to trade fractional shares.



Thursday, October 14, 2010

Working with WS Managed FOLIO’s in FOLIO Advisor

The FOLIO Advisor program using WS Managed FOLIO’s is a Portfolio Management System. After opening an account with FOLIOfn Investments, Inc. in the FOLIO Advisor program, the Client and the Adviser (WS Wealth Managers, Inc.) choose Target Account Allocations.

The Target Account Allocation process is the selection of percentages applied to fifteen (15) WS Managed FOLIO’s available. (There are also two (2) specialty Model FOLIO’s managed by other investment advisers available.)

Generally, the Client and the Adviser will together select three “potential scenarios” with different Account Allocations—Yellow, Red, and Green. During a Yellow period, or a period of “caution” where the Client decides to be “relatively defensive” because there is a perceived risk of market decline, the Account Allocation might be: 40% Moderate Core; 10% Dividend Income; 40% Classic Defense; and 10% National Muni. During a Red period where the Client decides to be “very defensive” because of a perception of “near certainty” that markets will decline, the Account Allocation might be: 20% Moderate Core; 70% Classic Defense; and 10% National Muni. During a Green period where the Client believes an exposure to markets is attractive, the Account Allocation might include larger allocations to the nine (9) FOLIO’s designed to rise during periods of growth.

Once the Target Account Allocations are determined and funds are available in the account, the Adviser will “subscribe” the account to the appropriate WS Managed FOLIO’s in the amounts consistent with the Account Allocation for the period, according to the Client’s instructions. The Adviser’s Chief Investment Officer manages each FOLIO: buying, holding, selling and rebalancing securities; using best efforts to achieve the objectives of each FOLIO. The process is similar to the CLIENT choosing a collection of mutual funds where the holdings in each mutual fund is managed by the fund manager/s. In the FOLIO Advisor program, following this illustrative example, the WS Managed FOLIO’s are like mutual funds managed by the Adviser’s Chief Investment Officer.

The FOLIO Descriptions clearly indicate that the Adviser can tactically change the character (increase cash allocation) of the holdings in each FOLIO when it is deemed advantageous to do so, however one major benefit of the FOLIO Advisor program is the use of a Rotation Strategy where the Account Allocations are changed from the Green to Yellow to Red, etc. as deemed advisable by the CLIENT with guidance and advice from Adviser.

The Adviser does not claim to be able to predict the future with precision, but will periodically provide a balanced forecast to the Client using “Reasonably Reliable Leading Indicators” or RRLI’s that will assist the Client in choosing a Green, Yellow, or Red scenario Account Allocation. One major RRLI is the US Treasury Yield Curve. None of the RRLI’s are 100% reliable. Choice of the scenario by the Client will depend on their judgment and risk tolerance.

This is not a market timing system. It is an intelligent Asset Allocation Strategy for adapting to changing market conditions. It must be noted that moving from one allocation to another may deprive the Client of substantial gains if markets rise significantly during periods when a Red scenario Account Allocation is chosen. It must also be noted that significant market/account declines may occur without warning no matter what scenario Account Allocation is chosen. Investing always involves significant risk.

Cost of the program (subject to a minimum asset level) and management of the FOLIO’s by the Adviser is a fixed annual percentage of assets in the account. Fees are deducted quarterly in arrears. There is no extra cost for shifting from one Account Allocation to another. (e.g. from Green to Yellow) Actual FOLIO’s percentages will probably drift away from the target Account Allocation and can be manually “rebalanced” by the Adviser upon the Client’s request on an annual basis. A more frequent rebalancing of Account Allocation can be accomplished by “subscribing” to a pre-set “published” FOLIO Allocation.

While it is possible to transfer securities to FOLIOfn with an “in-kind” transfer, it is generally required that new funds be added to accounts in the FOLIO Advisor program by the transfer or deposit of cash. This can be accomplished by check, wire transfer or electronic (EFT) transfer. Rollovers of IRA accounts at brokerage firms can be liquidated at the old broker with account balance transferred via the ACAT system without tax consequences. Special arrangements are possible for positions in non-qualified accounts where there are concentrated stock positions and the intent is to sell a major part of the holdings after transfer but with the lower cost of using the FOLIO Advisor program.

Under specific agreement between the Client and Adviser, additional “custom made” or “Ready to Go” FOLIO’s may be subscribed to within FOLIO Advisor, however all normal fees shall still apply. Such “special” holdings will only be considered if in the sole opinion of the Adviser (using a fiduciary standard of care) such holdings are consistent with the best interest and risk tolerance of the Client.

Clients are encouraged to provide publically available information to the Adviser about specific securities that might lead to improved performance of one or several WS Managed FOLIO’s. It is important to recognize that the performance of each WS Managed FOLIO is less dependent on any one security and more dependent on how all of the securities in the FOLIO work together providing benefits from diversification. The FOLIO Advisor program and it’s powerful cost efficient technology can increase the value of those benefits.

The client has the option of choosing from eight tax lot tracking options to help manage capital gains and minimize current tax liability. The Adviser does not attempt to limit realized gains when managing the WS Managed FOLIO’s. The FOLIO’s are managed by the Adviser with the goal of total pre-tax return.

The Client will have access to information about the account and it’s holdings online at www.folioclient.com. This includes performance information, holdings in each FOLIO, back-testing and metrics for the FOLIO’s that are subscribed. Account Statements, Confirmations and Tax Documents are all available on-line. In fact, for efficiency and preservation of natural resources all information is supplied only electronically. Client is required to understand and accept the risks of on-line investing.

Client is required to carefully read all disclosure documents before deciding to participate in the FOLIO Advisor program using WS Managed FOLIO’s. These include: the FOLIOfn Advisor Addendum to Investment Advisory, Supervision and Management Agreement; FOLIOfn Account Opening Disclosure Affirmation; and FOLIOfn Advisor Customer Agreement.
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This is not a complete discription of the program, but rather a summary. For more information, be sure to engage with WS Wealth Managers Inc. for a more thorough two way communication.


Investment advisory services by WS Wealth Managers Inc., a registered investment adviser.
Securities and Custody thru FOLIOfn Investments Inc., Member of FINRA and SIPC.
FOLIO Advisor is a program offered to clients of registered investment advisers.
WS Wealth Managers Inc. and FOLIOfn Investments, Inc. are not affiliated.

Managed Model FOLIO's--List

See separate posts for more in depth description:

Conservative, Defensive and Core:
WS Moderate Core I 
WS Conservative 40/60 I 
WS Classic Defense I 
Thematic:
WS Aggressive Growth Low PEG I  
WS Dividend Income I
WS Energy Resources I
WS Food Production I
WS Rising/Higher Rates I                                          
Fixed Income:
WS Preferred Utility Income I
WS National Muni I
International/Global:
WS International Opportunity I 
WS Swiss and S. Germany Euro Zone I
WS Japan I
Specialty:
WS Pipeline MLP Dividend  I 
WS REIT's and Resources I
Other:
Global Fusion Equity Strategy
Traditional Values Index 500

Tuesday, October 12, 2010

WS Moderate Core I Description

Diversified core portfolio designed for long term growth and moderate risk. Normal allocation is 70% Equity (20% International and 50% Domestic) with 30% Fixed Income. Fixed Income includes mixture of Corporate and Treasury securities---average maturity and duration are adjusted according to CIO's assessment of market conditions. Can move to as much as 60% short term tactical Fixed Income allocation using 7-10 year Treasury ETF if CIO believes that Equity markets are extremely overvalued. Slight Value orientation with a basic Core style. Designed for reasonable current income with target of 4% yield from dividends and interest. Standard Deviation targeted at 60-75% of S&P500 with an estimated Beta of 0.70.

This FOLIO is designed to provide a "balanced" exposure to domestic and international markets. Hence it is designed to  be the "core" holding in any long term investment portfolio in the WS FOLIO Advisor Program.  It is expected that allocation to this FOLIO may be reduced during periods when client determines that equities are substantially overvalued.

Past performance does not predict future performance.

Monday, October 11, 2010

WS Classic Defense I Description

Defense in this case is not related to the "Defense Industry" but rather "defensive" in regards to portfolio investment strategy with the goal of capital preservation.

Defensive diversified supplemental portfolio for periods of uncertainty and/or when equity markets are deemed to be overvalued and likely to decline for a protracted period. Could be used as core holding for investors with extreme risk aversion however this is not intended purpose. Overweighted allocation to Consumer Staples. Normal allocation is 40-55% Equity (90% + Domestic) and 60-45% Fixed Income. Fixed Income allocation is adjusted from time to time depending on CIO's assessment of interest rate risk. Utilizes some exposure to 20 year Treasury ETF that outperforms during periods of interest rate declines that sometimes occur during equity market declines. Can move to as much as 80% short term tactical Fixed Income allocation using 7-10 year Treasury ETF. Standard Deviation targeted at 20-40% of S&P500.  Target Beta of less than 0.30 compared to S&P500.

Past performance does not predict future performance. All investments are subject to risk and future performance is uncertain.

Saturday, October 9, 2010

WS Dividend Income I Description

Diversified supplemental portfolio having primarily Equities in US (65%) and Europe’s developed countries (35%) that have history and future expectations of reliable dividend payment. CIO gives priority to equities that have history and future probability of rising dividend payments. Designed for reasonable current income with target of 4.5% yield from dividends alone.  Equities of Banks and companies in Financial Services are minimized. Equity style is heavily oriented toward Large Cap Value.  Standard Deviation targeted at 70-85% of S&P500. Target Beta is less than 0.70.

Past performance does not predict future performance. Dividend income is result of payments made typically at the discretion of the company's management and Board of Directors and are not guaranteed. The value of equities with high dividend yields tend to decline signficantly if dividend payments are reduced.

Fixed Income FOLIO's Description

WS National Municipal I
            Defensive diversified core or supplemental portfolio of  municipal fixed income securities. Holdings of more than 500 securities through the use of three (3) ETF’s and two (2) Closed End Funds.  Mix of maturities is typically weighted toward longer term, however average Duration is sometimes less than 7 with average maturity of 14-15 years. Can change relative duration and average maturity toward shorter term during periods judged by CIO to have a high likelihood of rising interest rates. Designed to have a Standard Deviation of 35-50% of S&P500 and a Target Beta of less than 0.15. (Some income may be subject to AMT if applicable to client’s tax status.)

WS Preferred Utility Income I
            Managed portfolio of special taxable fixed "exchange traded debt securities". Since most are traded on national stock exchange (NYSE), liquidity is above average. Holdings of 8-12 securities, most of which are $25 par value debt securities, with the option to hold traditional preferred shares or hybrid trust preferred shares. Holdings are limited to electric/gas/telephone/CATV utilities. Securities issued by banks or other financial institutions are avoided. Maturities are generally long. During periods of falling interest rates, capital appreciation is possible as securities trade with a premium. During periods with falling rates, securities are often called before maturity dates and must be replaced with securities having lower interest rate.  During periods of rapidy rising interest rates, allocation to this FOLIO should be limited.

Past performance does not predict future performance. Fixed income investments described above can fluctuate in value and hence present real risk of principal volatility and loss. Unlike US Treasuries, each security in the above FOLIO's are subject to default risk.  The use of fixed income investments is generally thought to be as a "hedge" against equity volatility, as well as a source of reasonably predictable income.

WS Aggressive Growth Low PEG I (Growth)

Non-diversified portfolio with only 20-30 holdings in companies that are expected to have very high growth rates, especially during periods when the US economy is expanding. The basic philosophy is that used by Peter Lynch (GARP=Growth At a Reasonable Price) and/or the 15 Criteria proposed by Philip Fisher.  This includes a screening requiring relatively low Price to Earnings/Growth (PEG) Ratios. Also, financial “staying power” to be able to finance growth with low debt—i.e. low financial leverage. Only companies with “proven” past and expected future earnings are included. Stocks are concentrated in industries with high “operating leverage” including bio-pharma, specialty software, and alternative energy. Stocks with negative correlation to others are sought, providing above average benefits from frequent rebalancing. Can move to as much as 50% cash/money market for short term periods when CIO believes that market is extremely overpriced. Very high volatility with expected Standard Deviation of 200-300% of the S&P500, but potential for Alpha above 30.

Past performance does not predict future performance. Extreme volatility and risk indicates that this FOLIO is suitable only for a small portion of a diversified portfolio. Because of relative lower capitalization of holdings, Modern Portfolio Theory indicates that total portfolio is benefitted (closer to “Efficient Frontier”) with some exposure to this asset class, except for extreme risk averse investors.

Friday, October 8, 2010

WS Energy Resources I Description (Thematic)

Non-diversified portfolio with stocks in companies that produce, process and/or distribute fuels for transportation and/or the production of electricity. Oil, Natural Gas, Coal, and Uranium.  FOLIO seeks to profit from long term trend for rising cost of fuels relative to inflation. Includes ocean shipping and refining. Value oriented but volatility risk is significantly higher than S&P500. Standard Deviation expected to be 130-160% of S&P500 and would therefore be categorized as “volatile” and suitable for only a portion of a diversified portfolio. Could be considered as a partial hedge against inflation.  

Past performance does not predict future performance. Returns in the short term can be highly affected by unexpected geo-political, market speculation and weather related risks.

WS Rising/High Interest I Description (Thematic)

Diversified portfolio with  25-30 holdings of stocks in companies (in the CIO's judgement) that are expected to have a higher relative profitability during periods of rising interest rates because of their industry and their financial position. In other words, companies with relative pricing power during periods of inflation and financial “staying power” during periods of recession or stagflation. Companies must pass a screening process that compares EBITDA and Cash on Hand to Debt. Stocks are concentrated in Health Care, Technology, and Energy. (Financial Services stocks are avoided.)  Returns in the short run can be highly affected by actions of the US Federal Reserve and other headline risk. FOLIO uses ETF that moves up in value when interest rates rise as well as ETF that tracks Treasury Inflation Protected Securities.The FOLIO may lag the S&P500 significantly during periods of interest rate decline and hence is more risky during transition periods.  It should be categorized as “volatile” and suitable for only a portion of a diversified portfolio. Standard Deviation expected to be 120-140% of S&P500.  Target Beta is approximately 0.90.

Past performance does not predict future performance. Exposure to this FOLIO assumes some probability market expectations for rising interest rates and inflation.

WS Food Production I Description (Thematic)

Non-diversified portfolio of stocks in companies that produce and/or process food and/or are related to global food production.   FOLIO seeks to profit from long term trend for rising cost of food relative to inflation as well as a long term trend of increasing industry concentration (larger companies with economies of scale) in a historically fractured industry.  Could be considered to be a partial hedge against inflation. Some positions in stocks based in China. Standard Deviation expected to be 130-160% of S&P500 and would therefore be categorized as “volatile” and suitable for only a portion of a diversified portfolio.

Past performance does not predict future performance. Returns in the short term can be highly affected by unexpected geopolitical, market speculation and weather related risks or health scare headline risk.

WS Internat'l Opportunity I Description (Thematic)

Portfolio using Exchange Traded Funds (ETF's) and Exchange Traded Closed End Funds (CEF's) to provide a widely diversified exposure to international stocks (85%) and bonds (15%). The theme is the continued trend that developing countries profitably grow at a pace that is faster than the developed countries like the US and Europe. Also, but to a lesser extent, it assumes that currencies of these countries tend to rise in value relative to the US dollar--hence the value of equities and debt securities in US $ terms will rise.  (According to Morningstar Xray software, the FOLIO includes positions in more than 800 stocks and 170 bonds. More than 20% of equities are in Latin America, 30% in Asia-Emerging, and 35% in Asia-Developed. Mostly Large-Cap, but with around 20% Mid-Cap. Bonds are indicated to be generally "intermediate" term.) Standard Deviation ranges 130-160% of S&P500. The benchmark is the MSCI World (Ex US) Index.
Past performance does not predict future performance.  Operating expenses for ETF's and CEF's add to the normal investment management and brokerage fees of the FOLIO program and tend to be higher for international investments. This FOLIO tends to be significantly more volatile than domestic equity.

WS SSG Euro Zone I Description (Thematic)

Portfolio using Exchange Traded Funds (ETF's) and NYSE traded American Depository Receipts (ADR's) to provide exposure to a limited group of stocks with headquarters located in Switzerland and the adjacent area of Southern Germany.  These companies have a demonstrated track record of success in global trade in a variety of diversified industries requiring advanced technology. The theme is the continued trend of growing global trade and that these large companies who excel in global trade, grow at a pace that is faster than other companies in the developed countries like the US and Europe. Also, but to a lesser extent, it assumes that Swiss currency tends to rise in value relative to the US dollar--hence the value of equities and debt securities in US $ terms may rise. The style is more toward Growth than Value. Standard Deviation ranges 110-130% of S&P500. The benchmark is the MSCI World (Ex US) Index.

Past performance does not predict future performance.  This FOLIO tends to be more volatile than domestic equity and is subject to concerns regarding debt problems of some European countries causing a fall in European currency.

WS Japan I Description (Thematic)

Portfolio using Exchange Traded Funds (ETF's) and NYSE traded American Depository Receipts (ADR's) to provide exposure to a limited group of stocks with headquarters located in Japan.  (According to Morningstar Xray software, the FOLIO includes positions in more than 600 stocks thru the diversification provided by the ETF's. The style is more toward Value than Growth and more than 10% of holdings are Mid-Cap.) Most of these companies have a demonstrated track record of success in global trade in a variety of diversified industries requiring advanced technology. One major theme regarding this FOLIO is that for various reasons,  prices for Japanese equities are thought to be significantly undervalued. The NIKKEI 225, below 10,000 is now less than 30% of the peak level of 35,000 more than 20 years ago in 1990.  Another theme is the continued trend of growing global trade and that these companies who excel in global trade, grow at a pace that is faster than other companies in the developed countries like the US and Europe. Also, but to a lesser extent, it assumes that the Japanes Yen currency tends to rise in value, over the long run relative to the US dollar--hence the value of equities and debt securities in US $ terms may rise.  Standard Deviation ranges 100-115% of S&P500. The benchmark is the MSCI World (Ex US) Index.

Past performance does not predict future performance.  This FOLIO tends to be more volatile than domestic equity and is subject to concerns regarding issues related to management of Japan's economy and currency by the Japanese government. Short term fluctuation in the relative value of the Japanese Yen could significantly affect this FOLIO.

Thursday, October 7, 2010

WS REIT's & Resources I (Special)

Diversified supplemental portfolio having primarily Equities in US (90%) and Australia (10%) that have history and future expectations of reliable dividend payment derived from operations. Most of the companies are engaged in the operation of commericial real estate enterprises (Real Estate Investment Trusts or REITS).  About 30% of the FOLIO is exposed to Mining and Natural Resource companies, including metals (Gold, Copper, Nickel, Iron Ore, etc.) and timber. CIO gives priority to equities that have history and future probability of rising dividend payments because of a relatively conservative capital structure and rising value of the product/s distributed. This FOLIO's strategy is intended to benefit to a degree from rising inflation and an expanding economy.  Designed for reasonable current income with target of 3-4% yield from dividends alone.    Standard Deviation targeted at 120-150% of S&P500. Target Beta is 1.25.

Past performance does not predict future performance. Dividend income is result of payments made typically at the discretion of the company's management and Board of Directors and are not guaranteed. REIT’s are taxed differently from regular corporations, and distributions from them can also be subject to rules that are different from rules that apply to regular corporate dividends.  It is recommended that  all interested investors visit the website  http://www.reit.com/IndividualInvestors/IndividualInvestors.aspx for more information. The value of equities with high dividend yields tend to decline signficantly if dividend payments are reduced.

WS Pipeline MLP Dividend I (Special)

Diversified supplemental portfolio having primarily Equities in US (85%) and Canada (15%) that have history and future expectations of reliable dividend payment derived from operations of energy related distribution pipelines. CIO gives priority to equities that have history and future probability of rising dividend payments because of a relatively conservative capital structure and rising value of the product/s distributed. Designed for reasonable current income with target of 5.5% yield from dividends alone.    Standard Deviation targeted at 90-100% of S&P500. Target Beta is less than 0.50.

Past performance does not predict future performance. Dividend income is result of payments made typically at the discretion of the company's management and Board of Directors and are not guaranteed.  MLP's are publically traded Limited Partnerships and hence distribute dividends as a share of profits requiring a K1 tax document rather than a 1099. Sometimes the final K1 is not available for early tax returns and in some cases may require a tax filing extension. Investments within IRA's may result in Unrelated Business Income issues.It is recommended that investors visit http://www.naptp.org/Navigation/PTP101/PTP101_Main.htm for more information. The value of equities with high dividend yields tend to decline signficantly if dividend payments are reduced.

WS Conservative 40/60 I (Special)

Minimum $20,000 Investment


Diversified core portfolio for conservative long term growth and lower risk. Income from dividends and interest designed for target of 5% yield. Normal allocation is 40% Equity (15% International, 25% Domestic) with 60% Fixed Income. Fixed Income may have higher risk securities. Essentially made up of three (3) securies: A Vanguard no load mutual fund sub-advised by Wellington Management; a Global Value oriented stock ETF; and a 7-10 year Treasury ETF.  Can increase allocation toward shorter term treasuries during periods of rising interest rates. Can move to as much as 80% short term tactical Fixed Income allocation using 7-10 year Treasury ETF if CIO believes that Equity markets are extremely overvalued. (According to Morningstar Xray software, the FOLIO includes positions in more than 600 stocks and 600 bonds. Mostly Large-Cap, but with around 10% Mid-Cap.)  (Vanguard fund has a $10,000 minimum.) Equity style is heavily oriented toward Value. Standard Deviation targeted at 35-50% of S&P500.

Past performance does not predict future performance. This FOLIO is intended for use in relatively larger accounts, as a supplement to WS Moderate Core I and WS Classic Defense I with the objective of increased diversification, not only of securities but of management judgment.