News Column

New Collective Investment Fund Brings Endowment Investment Philosophy™/Liquid Alternatives to Defined Contribution Plans

August 18, 2014



APPLETON, Wis.--(BUSINESS WIRE)-- Alta Trust Company has partnered with ETF Model Solutions, LLC. to launch the Endowment Collective Fund (CUSIP: 26923F105). The Endowment Collective Investment Fund (CIF) seeks to improve risk-adjusted returns of traditional two-dimensional portfolios of stocks and bonds by adding alternative investments, such as private equity, hedge strategies and real assets to create a 3-dimensional portfolio.

Managers of university endowments, pension, and defined benefit plans have historically utilized lower-correlated alternative investments to improve the risk-adjusted returns of their portfolios. ETF Model Solutions, through the Endowment CIF, now brings the Endowment Investment Philosophy™ to the defined contribution plan space. However, rather than private placements or limited partnerships, the Fund uses liquid alternative investments, such as exchange-traded funds and mutual funds to obtain its alternative asset allocations.

ETF Model Solutions believes that the 3-dimensional Endowment CIF offers 4 major benefits when compared to most target date or balanced funds: (1) added protection for the Plan Sponsor, as both the trustee and the manager of the CIF serve in a fiduciary capacity; (2) reduced portfolio volatility than portfolios with greater equity allocations due to its hedge strategy holdings; (3) protection from inflation due a greater allocation to real assets, such as commodities, precious metals, real estate and infrastructure investments; and, (4) lower interest rate risk due to a smaller allocation to fixed income investments.

The Endowment CIF utilizes a core-satellite portfolio construction with low-cost, cap-weighted equity and fixed income ETFs comprising the core allocation of the asset class, with fundamentally-weighted funds utilized in an attempt to gain alpha. The strategically-managed Endowment CIF is presently targeted to an allocation of 40% global equity, 20% global fixed income and 40% liquid alternative investments.

Alta Trust maintains selling agreements with most major retirement plan platforms, thus plan advisors can offer the Endowment CIF to their Plan Sponsor clients through their existing platform relationships. Plan Sponsors can add the Endowment CIF to their retirement plans through a simple participation agreement, while maintaining their current investment options as well as their existing advisor/TPA/recordkeeping relationships.

CIFs are pooled investment funds available only to qualified retirement plans such as defined contribution 401(k) and defined benefit plans and are regulated by state and federal organizations, such as the Office of the Comptroller of the Currency. CIFs are priced daily through the NSCC, just like mutual funds.

ETF Model Solutions, LLC. (Fund Investment Manager) is a Third Party ETF Strategist that specializes in creating customizable ETF-based asset allocation models. ETF Model Solutions is co-creator of the Endowment Index™ calculated by Nasdaq OMX® (Symbol: ENDOW).

Alta Trust (Fund Trustee) is an innovative financial services firm that acts as trustee for collective investment funds which feature unique money managers. The professionals at Alta Trust have been working with qualified plans for over three decades and provide daily oversight of all fund trading activity and accounting, as well as annual auditing of the fund to assure accurate and reliable account balances.

Disclosure

Alta Trust Company is a South Dakota chartered trust company that acts as trustee of the Funds. Collective Investment Funds are bank maintained trust funds and are not registered with the Securities and Exchange Commission. The Declaration of Trust for the Trust describes the procedures for admission to and withdrawal from a Fund. The Declaration of Trust and the Fund’s Employee Benefit Summary should be read in conjunction with this information. The information contained in this communication is for informational purposes only and is not intended to provide legal or tax advice. Before investing in any Fund, Alta Trust recommends that potential investors consider the Fund’s investment objective, strategies, risks and expenses. We recommend that investors consult with their financial, legal and tax advisers prior to investment in any fund. Potential investors in any Fund may obtain a copy of the Employee Benefit Summary from the plan sponsor or from Alta Trust or ETF Model Solutions, LLC.

Not FDIC Insured

         

May Lose Value

         

No Bank Guarantee






ETF Model Solutions, LLC

Prateek Mehrotra, MBA, CFA®, CAIA®

Chief Investment Officer

920.785.6012

Prateek@ETFModelSolutions.com

or

Tim Landolt, MBA

Managing Director

920.785.6012

Tim@ETFModelSolutions.com

or

Alta Trust

Adam Ponder

Executive Vice President

303.996.3781

aponder@trustalta.com


Source: ETF Model Solutions, LLC


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