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Diversify your IRA, 401k, Trust or other Tax Deferred Plan

July 31, 2006

 

Many investors want to know what's working in the current market environment, and the listing of the top 5 systems on a risk adjusted basis for the past 90 days shows just that. The following rankings are the top systems on a risk adjusted basis at Attain over the past 90 days using a risk adjusted ratio which equals the past 90 days return / past 90 day drawdown.

Rank System 90 Day RoR Return In Dollars 90 Day Drawdown DD In Dollars Init Cap (000s)
1 Omega3 v1 DAX 30.84% $5,859.67 -4.41% ($838) $19
2 BounceMOC EMD 39.22% $3,922.00 -7.50% ($750) $10
3 Bounce MOC ERL 32.66% $3,266.00 -6.80% ($680) $10
4 Keystone SP 24.27% $18,200.50 -6.68% ($5,012.50) $75
5 Rayo Plus DAX 23.56% $7,069.04 -7.23% ($2,168) $30
Hypothetical Model Account Performance.
Please see Important Risk Disclaimer at Bottom of Page.

 

Diversify your IRA, 401k, Trust or other Tax Deferred Plan

Did you know that IRA’s, 401k’s, Trusts, and other tax deferred investments are available for diversification into Alternative Investment strategies through Attain?

Many investors’ largest investment assets are socked away in vehicles that can’t be touched for many years to come – and it only seems logical to diversify some of those long term assets into vehicles that can do well even if the stock market goes DOWN.

Understanding how diversification into alternative assets or strategies affects a portfolio’s bottom line today and 10-30 years down the road is critical to one’s financial well-being. For most investors the benefits of diversification are often overlooked in good times, but become painfully clear in bad times. As we have seen in the recent US bear market period, when things go bad, conventional portfolios can suffer greatly. How would 10 more years of sideways or down markets affect your retirement planning?

That being said we are not suggesting putting all of your retirement assets into Alternative strategies - as there is the risk of loss; but studies have shown that a healthy dose of exposure may actually increase returns while reducing risk.

For example an investor with $200,000 in retirement funds holding long the S&P 500 Index over the past 5 years has seen an average return of just 2.52% while experiencing a 44.73% drawdown! The same investment into a strategy like Zenith Resources would be worth ~$600,000, having returned 197% over the past 5 years while experiencing a maximum month end drawdown of only 3.12%.

Past performance is not necessarily indicative of future results.

  YTD 12 Months 3 Years 5 Years Max DD
Zenith Resources 8.20% 17.50% 55.33% 197.04% 3.12%
S&P 500 2.25% 8.15% 36.95% 12.6% 44.73%

As the above single example expresses; alternative investment vehicles, such as Zenith Resources, can provide protection as well as growth during bear markets in stocks and bonds due to their low correlation to the traditional investment vehicles.

The benefits of Alternative Investments on an investor’s overall portfolio performance are further illustrated in the figures and tables below, comparing a traditional stock and bond portfolio to one containing a 25% allocation to an Attain portfolio.

The portfolio with a 25% allocation to an Attain Portfolio shifts the distribution of returns significantly to the right and shows less frequent losing months with smaller losses.

Figure 3 below show the average monthly loss is .61% smaller for portfolios containing an Attain Portfolio, which represents an average annualized bear market protection equal to 7.32%.

Furthermore the frequency of losing months drops from 33 to 20 over the period and the average profit for all months is 9.12% higher on an annualized basis for the portfolio containing an Attain Portfolio.

Based on the above analysis being done by individual investors, investment advisors, pension funds, etc the number of investors moving in this direction has been increasing year over year– before getting started below are some common investor questions.

Question on getting started:

  1. Where is my account held? All IRA’s and 401k’s are operated by a registered “custodian” or trust company who act as your liaison between your trading account and the IRA. If you do not already have an account with one of the authorized futures based custodian companies we can help you to establish one via a transfer or roll-over of funds. These funds are then distributed into your own customer segregated account within one of our clearing firms (i.e Man Financial or PFG).

  2. Is there any tax penalty for trading futures in an IRA or 401k? No, all investment activity in your account is treated exactly the same as if you were investing in Mutual funds or even holding on to cash.
    *Hint – IRA funds should be sent to a registered Trust or Custodian BEFORE trading begins…failure to do so could result in early withdrawal penalties.

  3. Are there any limitations as to how much I can invest? Yes, depending on the clearing firm who officially processes your daily trades (i.e Man Financial or PFG) each company has their own policy. PFG has no restrictions on the amount you can invest; however Man Financial allows for only 30% of your total retirement assets to be invested.

  4. Can you pay for systems and or CTA’s out of your IRA account? Yes, all trading related expenses can be paid for directly out of the account with no penalty.

  5. Are there any annual fees or costs from the Trust company? Yes, each trust company has their own minimal cost structure – please give us a call or send an e-mail to invest@attaincapital.com for a list of the recommended trust companies and their fees.

Now that you know you have the ability to diversify your retirement assets is out there let us help you find the right model for your account... you can e-mail any one of our representatives or feel free to e-mail me directly at jse@attaincapital.com with any specific questions you have.

Happy Planning!!

- Jeff Eizenberg

IMPORTANT RISK DISCLOSURE
Futures based investments are often complex and can carry the risk of substantial losses. They are intended for sophisticated investors and are not suitable for everyone. The ability to withstand losses and to adhere to a particular trading program in spite of trading losses are material points which can adversely affect investor returns.

Feature   |   Week In Review   |   Chart of the Week   |  

Chart of the Week : Risks/Rewards of Timing a System

Feature   |   Week In Review   |   Chart of the Week   |  

***Overview***

The US stock market had its best week in years last week as b earnings, lower energy prices, and speculation that the Fed will stop raising interest rates provided the perfect conditions for the rally. For the week SP futures gained +3.18%, NASDAQ futures were up +4.11%, Russell 2000 futures rallied +4.34%, and SP Midcap 400 futures climbed +3.92%.

Lower energy prices were part of the reason for the gains in the stock markets. Despite the continuing violence in the Middle East energy prices moved lower due to bearish weekly supply numbers. Unleaded Gas futures led the downward move falling -2.49% while Crude Oil futures dropped -1.60%. Heating Oil futures also moved slightly lower at -0.03% although Natural Gas prices headed in the other direction gaining +2.51%.

Precious metal prices moved higher last week on a sector wide rally that saw High Grade Copper gain +6.80%, Silver moved +4.79% higher, Gold rose +2.37%, Platinum climbed +1.08%, and Palladium rallied +0.87% higher.

Bonds and Foreign Currencies also moved higher although at a slower pace than the metals markets. Both markets were sparked by talk that the Fed will at least temporarily pause on raising interest rates at it’s next meeting in August. For the week 30 year bonds were up +0.52% and 10 year notes rallied +0.41 higher. In currency trading Eurocurrency rose +0.43, the Japanese Yen was up +1.20%, the Aussie Dollar rose +1.93%, while the Dollar Index fell -0.56%.

Grains were very choppy last week trading higher one day and lower the next. By Friday the only market that had moved significantly was Wheat which fell -4.60% while Corn and Soybeans were virtually unchanged. In the meats Lean Hogs had a big week climbing +3.36% while Live Cattle was unchanged. Finally, in the softs Coffee climbed +3.97%, Sugar was down -3.91%, and Cotton was unchanged.

***Day Trading***

Day trading systems favored the buy side last week in response to a moderate rally in stock markets domestically and abroad. About half of the systems came out of the week profitable and those that performed optimally were able to buy at bargain prices in what turned out to be fairly choppy trading conditions for the majority of the week.

Leading the way last week was Phi Plus Dax which made +$1,587.52 in profits on three trades-two on Monday and one on Wednesday. Compass was the runner-up with profits of +$1,582.15 on three trades. Rayo Plus Dax was just behind with gains of +$1,524.32. Beta Con 4/1 Dax made +$1,215.97 on two trades from Monday. The first of the two trades was profitable and after exiting the first trade the system re-entered long for a small losing trade. AG Xtreme was quiet last week following a home-run trade the week prior but still put together two nice trades for +$1,150.

Omega3 v1 Dax had two trades last week for gains of +$1,011.22. Compass eRL had two trades for profits of +$872. Impetus eRL had three trades last week for a gain of +$720 per contract. Russell Daytrade had a pair of profitable short trades on Thursday that made +$624-the system will enter into up to three contracts per signal. BetaCon 4/1 ESX made +$359 for the week and is relatively conservative because of the smaller point value of the ESX to the Dax. Beta v1 Dax had two trades as well that made +$195. The only other profitable day trading systems were Bounce eRL and eMD which made +$80 and +$70 respectively.

On the losing side, Tanker had two trades totaling a loss of -$600. Energy markets have been moving, but a lot the moves have taken place before the start of the pit session limiting the opportunities for the system. R-Mesa eRL took a step back from its recent hot streak and lost -$850. Epsilon 12/12 Bund lost -$1,097 after a volatile week in interest rate futures. Theta v1 Dax had five trades totaling -$1,392.76. RC Success eRL got caught on the wrong side of the market on a few different occasions and gave back -$1,768.60 for the week. Finally, Beta v2 Dax had six trades for a setback of -$3,423.09

***Swing Trading***

Challenging was the word of the week for swing trading systems as mixed economic reports regarding inflation and geopolitical tensions in the Mideast made for nervous intraday action in most markets, although most stock indices had b weeks on the backbone of favorable earnings releases. A handful of systems were able to benefit from the rise in the stock markets particularly those that came into the week long and or entered long at the beginning of the week.

Tzar ERL took the top spot amongst swing traders with gains of +$2,930 in open and closed trades for the week. Spartan ES and Tzar ES checked in with gains +$1,945 and $1,470 respectively again thanks to the b gains stock indexes.

Despite the success of the few systems above several programs quite a few systems came into the week short with a great deal of open trade profits that quickly evaporated with the rally. Among those systems losing open trade profits were Delphi eRL -$5,366.6, Ping Systems -$4,558.8, Tzar eMD -$2,810, Delphi eMD -$1,662.5, Seasonal ST eRL -$1,500, Tzar NQ -41,200, and Axiom eMD -$851.70. Often times when the market makes a sharp change in direction investors have to rely on day trading systems to capitalize immediately and swing trading system to catch up... once again signifying the need for multi market/time frame diversification!

Finally the Forex System sector had a rough week as volatility and a general lack of direction and guidance from outside influences made for a tough trade. Volcano Fx EURJPY pair was the only system to get out of the week with a profit +$233.30. On balance the rest of the Forex systems saw losses from -$540 to -$1340 which wasn’t bad as most had b gains the previous week.

***Long Term***

Long term trend followers continue to have a very slow summer due to choppy market conditions in the treasuries, currencies, and commodities. The good news is that the systems have been treading water and not been getting caught up in too many of the false market moves. The bad news is that there are not many interesting trades or market moves to discuss. So, this week we will keep this section short and only re-hash new or closed out trades from last week.

Trend Simplicity entered two new positions last week with a long entry in the British Pound and a short entry in Sugar. Both trades have started off on the right foot with the British Pound making +$450.00 in open trade profits and Sugar making +$404.00 in open trade profits. Trend Simplicity also closed out a short Coffee trade for a loss of -$1875.00 per contract.

Axiom LT was active in the grains reversing long in Corn and taking a loss of -$1350 on the previous short position. The system also entered long in London Aluminum and is making +$74.00 per contract.

Finally, Andromeda was stopped out of a short Eurobund trade for a loss of -1620 EUR per contract.

Please Login to: http://www.attainaccess.com for the latest updated statistics.

IMPORTANT RISK DISCLOSURE
Futures based investments are often complex and can carry the risk of substantial losses. They are intended for sophisticated investors and are not suitable for everyone. The ability to withstand losses and to adhere to a particular trading program in spite of trading losses are material points which can adversely affect investor returns.

Feature   |   Week In Review   |   Chart of the Week   |