SIERRA'S CUSTOMIZED ACCOUNTS
For accounts over $1,000,000, Sierra’s Customized accounts involve individually-tailored portfolios of mutual funds. The specific allocation will depend upon a careful discussion and analysis of your unique needs, your investment experience and your long-term goals.
Customized Allocations Will Vary
Because the asset allocations and specific funds are tailored for each Customized account, the portfolios will vary from one Customized account group to another. Sierra’s Managing Directors usually start with a consideration of the mutual funds researched and analyzed for current use in other Sierra programs. Ongoing, additional research for Customized accounts typically results in identification of more specialized funds to help diversify large portfolios.
From time to time, Sierra’s Managing Directors make changes, upgrading to a new Designated Fund in the same Asset Class, or revising the Asset Allocation mix among Asset Classes.
Click here for a list of some of the Designated Funds currently being used by Sierra. (Some funds may be appropriate for almost every portfolio. Others may be in use for only a few Customized clients, depending on their objectives.)
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Customized Program Quarterly Performance (after fees): |
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| Year | 1st Quarter |
2nd Quarter |
3rd Quarter |
4th Quarter |
Full Year |
Cumul. Return |
| 1995 | 1.80% | 5.03% | 2.69% | 1.01% | 10.91% | 10.91% |
| 1996 | 4.27% | 3.36% | 1.14% | 5.04% | 14.50% | 26.99% |
| 1997 | 2.31% | 4.74% | 6.17% | -3.38% | 9.92% | 39.59% |
| 1998 | 6.00% | -0.79% | 1.75% | 3.69% | 10.94% | 54.87% |
| 1999 | 1.05% | 2.83% | -0.89% | 8.36% | 11.60% | 72.83% |
| 2000 | 7.13% | 0.92% | 1.38% | 2.00% | 11.79% | 93.21% |
| 2001 | -2.05% | 2.62% | -3.61% | 5.11% | 1.84% | 96.77% |
| 2002 | 3.31% | -0.04% | -2.67% | 4.09% | 4.63% | 105.88% |
| 2003 | 4.35% | 10.92% | 3.04% | 8.69% | 29.63% | 166.88% |
| 2004 | 4.52% | -5.15% | 3.01% | 8.07% | 10.37% | 194.55% |
| 2005 | 0.99% | 0.25% | 5.24% | -0.63% | 5.88% | 211.87% |
| 2006 | 3.49% | -1.31% | 1.07% | 4.89% | 8.27% | 237.66% |
| 2007 | 0.88% | 1.17% | -0.59% | -1.08% | 0.36% | 238.86% |
| 2008 | -2.10% | 0.12% | -3.82% | -5.73% | 219.44% | |
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Average annualized compounded return: |
8.81% | |||||
This data is a composite of all Sierra Customized accounts (currently, clients with over $1,000,000 under our management). These returns have significantly outperformed our benchmark* over the past ten years. In the context of the severe multi-year bear market that began in 2000, we believe our long-term performance is in the upper tier of comparable multi-asset-class managers.
Comments:
The goal of our Customized accounts is to produce satisfying long-term returns while limiting downside risk, a combination which we have found meets the goals of retirees and other conservative investors. It is not our goal to equal or exceed the stock market averages. Instead, *our benchmark is the Morningstar average for "World Allocation" mutual funds, although we manage our Customized accounts at a significantly lower risk level.
Please notice that our results do vary from quarter to quarter, and that some quarters are negative, but that declines have never been very large, even during the bear market.
These returns are the weighted average of all Customized accounts managed by Sierra, and assume reinvestment of dividends and capital gains.
The results shown here reflect a fee rate of 0.375% per quarter, which is our current rate for a $1,000,000 account. Our fee rates are lower for accounts (total per client household) over $1,000,000, so for such accounts, the net returns would be slightly better than those illustrated here. Conversely, for a pre-2005 Customized account under $1,000,000, the net returns would have been slightly lower.
At Sierra, we take the view that we cannot manage returns -- the stock, bond, and commodity markets fluctuate significantly and unpredictably -- but we can manage downside risk. We apply an integrated, well-proven set of risk-management disciplines to limit the impact of adverse market episodes on our managed accounts. In most cases, we believe our approach will limit overall downside risk to 3% or 4% of the client's overall account -- as we have in the recent past, during an extended and severe bear market -- although such results cannot be guaranteed.
Notes:
Every day, Sierra monitors the price trend for each Designated Fund as part of our risk-management disciplines: When any Designated Fund turns down more than a normal fluctuation (which occurs on average about twice a year), Sierra moves the relevant assets temporarily into the safety of money market or a safe-haven fund; and when the Designated Fund turns back up significantly, Sierra moves the relevant assets back into the Designated Fund.
Also, from time to time, Sierra’s Managing Directors make changes, upgrading to a new Designated Fund in the same Asset Class, or revising the Asset Allocation mix among Asset Classes.
Although Sierra accounts are designed to have limited downside risk, some risks remain. The extent of downside risk will vary depending on the goal of each Customized portfolio. Please review carefully the Limitations and Cautions in your Investment Advisory Agreement.
SIERRA
INVESTMENT MANAGEMENT, INC.
3420 OCEAN PARK
BOULEVARD, SUITE 3060
SANTA MONICA, CA 90405
310/452-1887 800/729-1467 FAX 310/452-2680
Click here to write to us: Info@SierraInvestment.com