iMIPS Portfolio Construction

Based on the written Investment Management Agreement that clients execute, IAM is granted limited discretionary authority to implement client-approved investment strategies.  Investments are selected based on past performance (as applicable), manager tenure, portfolio turnover, fees and a variety of academic statistics including beta, standard deviation, R-Squared, Sharpe Ratio, Information Ratio, Tracking Error and other measurements.  These statistics are provided by third-party vendors and the investment sponsors and are evaluated by the IAM asset allocation model manager, on both an absolute and relative basis, relying on standards set by the firm.  We may obtain and utilize information and data from a wide variety of public and private sources.  In categorizing the asset classes of liquid investments, we will rely on prospectuses and information obtained from the issuer or its agents, or through publicly available sources.

iMIPS Philosophy

The iMIPS Investment Philosophy

The iMIPS rely on an investment philosophy that is based upon the latest academic research, such as the Modern Portfolio Theory, Fama-French Three-Factor Model and the latest discoveries in behavioral economics via semantic analysis.  Modern Portfolio Theory seeks to reduce portfolio risk while increasing portfolio returns.  In addition, INOVE believes that investors should be compensated for the risk that is assumed by their portfolio holdings.  Meaning, in a perfect world, investors should make more money because they take more risk.  This is accomplished by following the four essential elements of Modern Portfolio Theory, which are as follows:

• Security Valuation: To describe a universe of assets in terms of expected return and expected risk.  Meaning, to assign a market value and level of risk to a given universe of investment(s) at a specific point in time.
• Asset Allocation: To determine how assets are to be invested among varied classes of investment, such as stocks and bonds.
• Portfolio Optimization: To reconcile risk and return in the selection of the securities to be included within a given portfolio.  For example, we must determine which potential portfolio holdings offer the best opportunity for positive return for a given level of expected risk.
• Performance Measurement: To divide each investment’s performance into market-related and industry specific securities related classifications.

As a result of our discipline, investing in more than one asset class, an investor can reap the benefits of diversification, chief among them being a reduction in the riskiness of the portfolio.  The Fama-French Three-Factor Model, through research, has found that over long periods of time, value stocks outperform growth stocks and, similarly, small cap stocks tend to outperform large cap stocks. Recent developments in the area of semantic analysis and data analytics assist us in our understanding of human behavior.  By gaining a greater understanding of human behaviors, we now are focused upon isolating economic leading and predictive indicators versus the analysis of lagging indicators.  IMIPS is founded on the premise that science, supported by rigorous academic research, combined with semantic analysis offers one of the more innovative approaches to investing. The iMIPS investment philosophy is based on the following basic principles:

• Develop highly diversified portfolios of correlated and non-correlated investments that feature a broad range of asset classes, investment styles and market sectors.
• Use market-based investments (index of security holdings), not manager-based investments (not individually selected stock and bond investments).  By using index funds, iMIPS removes a level of stock and bond selection risk.
• Hold the investments for long periods of time, yet be flexible and prepared to exit a position.
• Periodically reallocate investments as conditions warrant.
• Strategically rebalance portfolio to reduce risk and capture growth opportunities.

IMIPS are highly diversified, invests primarily in mutual funds and ETFs, and features as many as thirty (30) asset classes and investment management styles.

Introducing iMIPS

INOVE Model Investment Portfolio Strategies – iMIPS

WHAT ARE iMIPS?  They are risk management tools for liquid assets, that when utilized properly can assist in the creation, growth, management and protection your wealth.

INOVE has developed a series of model investment portfolios, termed the INOVE Model Investment Portfolio Strategies, or iMIPS.  Through iMIPS, we have created globally diversified asset allocation models for wealth management and retirement plan client accounts.

The iMIPS range from Capital Preservation and Income (most conservative) to Aggressive Growth (most aggressive).  The risk tolerance categories for iMIPS investment objectives are detailed below:

• Conservative:  Capital Preservation and Income:    This strategy seeks capital preservation and current income.  Investments are primarily made in a diversified selection of mutual funds and exchange-traded funds (“ETFs”) that may invest in U.S. Government long, intermediate and short-term bonds, corporate bonds, preferred stocks, treasury bills and other highly-rated, short term (e.g., 90-day) securities and U.S. large cap equities.
• Balanced:  Income and Growth:  This strategy seeks current income as its primary objective, with capital appreciation as a secondary consideration.  Investments are primarily made in a diversified selection of mutual funds and ETFs that may invest in U.S. Government long, intermediate and short-term bonds, high-yield and foreign bonds, preferred stocks, U.S. large cap, mid cap, small cap equities and foreign large cap equities.
• Balanced:  Growth and Income:  This strategy seeks total return through a combination of capital appreciation, its primary objective, and current income, its secondary objective.  Investments are primarily made in a diversified selection of mutual funds and ETFs that may invest in U.S. large cap, mid cap and small cap equities, foreign large cap and emerging market equities, U.S. Government long and intermediate-term bonds, high-yield bonds, foreign and emerging markets bonds.
• Moderate Growth:  This strategy seeks to maximize capital appreciation.  Investments are primarily made in a diversified selection of mutual funds and ETFs that may invest in U.S. large cap, mid cap and small cap equities, foreign large cap and emerging market equities, U.S. Government intermediate-term and high-yield bonds.  Large cap equities are stocks with a market value of $5 billion and above, mid cap equities are stocks with a market value between $2 billion and $5 billion, and small cap equities are stocks with a market value between $500 million and $2 billion.
• Aggressive Growth:  This strategy seeks to maximize capital appreciation by increasing the portfolio allocation in domestic small cap and emerging market equities.  Investments are primarily made in a diversified selection of mutual funds and ETFs that may invest in U.S. large cap, mid cap and small cap equities, foreign large cap equities, emerging market equities and U.S. Government intermediate-term bonds.

Embedded within iMIPS is the directive to reallocate and rebalance client portfolios when necessary.

Plan Sponsor Benefits Solutions

Retirement Plan Investment Management Services

For corporations and institutional plan sponsors, we provide the following retirement plan consulting and investment management services:

• Defined Benefit and Defined Contribution legislative policy review and analysis
• Defined Contribution Plan Design
• Solicitation of Service Providers
• Creation and review of Investment Policy Statement (IPS)
• Individual Fund and Separate Account Analysis
• Participant Communications Plan Development
• Enrollment of Plan Participants
• Creation of Participant Education Services Plan
• Ongoing Plan and Investment Management Review

The Company provides services to assist plan sponsors, plan trustees and investment committees to meet their ERISA fiduciary responsibilities.  These services are provided under ERISA § 3(21) and ERISA § 3(38).  Under these sections, clients can engage INOVE to provide investment advisory services.  By doing so, INOVE shares fiduciary responsibility with plan trustees and investment committees as it relates to the assets the Company has under agreement to provide investment management or advisory services. As a part of a client’s fiduciary team, INOVE provides the investment expertise to implement the plans investment policies and objectives.

Retirement plan assets are monitored on an ongoing basis.  Plan assets are rebalanced or reallocated based on market or other conditions as warranted.  Changes in the asset allocation models, which include adding, removing or replacing securities at the recommendation of INOVE, are made infrequently based on significant changes in the economic, financial or political climate; changes in the tax code; and the management of the securities used by the Investment Option.  Changes may be made based on the Plan sponsor’s circumstances or restrictions that they may place on the investments in the account.

Our Risk Management Investment Solution

The INOVE Plan Sponsor Benefits Group provides the following organizational risk management tools:

Asset Allocation Model Investment Portfolios for ERISA Plans & Plan Sponsors

IAM provides the INOVE Model Investment Portfolio Strategies (“iMIPS”) to plan sponsors of defined contribution retirement plans (“Plans”) subject to the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended, which gives participants the ability to individually direct the investment of accounts under the Plan.

Through iMIPS, retirement plan sponsors can create and recommend a range of asset allocation model portfolio strategies, each consisting of a diversified mix of asset classes and investment styles for retirement plan participants. Plan sponsors will also receive educational guidance to assist in its review of these models. In addition, Plan sponsors receive guidance concerning investment portfolio options and model portfolio composition.  Mutual funds and exchange-traded funds are used in the creation of your retirement plan investment options.  For company stock, the investment category will be provided, but company stock is not included within the model portfolio.

The INOVE Model Investment Portfolio Strategies (“iMIPS”) are globally diversified asset allocation models. Investments are primarily in a diversified selection of mutual funds and ETFs that may invest in U.S. large cap, mid cap and small cap equities, foreign large cap equities, emerging market equities, U.S. Government long, intermediate and short-term bonds, high-yield bonds, foreign and emerging markets bonds.

OUR 6-STEP PROCESS

Step 1:  Comprehensive Plan Analysis.  Generally, INOVE holds an initial meeting with the Plan sponsor to explain the firm’s services and fees and to collect detailed financial data about the Plan.  Emphasis is placed on identifying the Plan sponsor’s risk exposure, funding obligations, fiduciary practices, investment objectives and determining the comprehensive financial situation of the Plan.

Step 2:  Asset Allocation Model Portfolio Development.  Next, we consider the Plan’s investment objectives, financial situation, suitability and other relevant factors before making a recommendation.  After the Plan sponsor reviews and approves our recommendations, the asset allocation model portfolio strategies are offered to the Plan sponsor for review.

Step 3:  Investment Options Provided.   Following Plan sponsor approval, iMIPS are offered to the Plan participants as comprehensive investment options.  Following the completion of the individual investor profile and risk tolerance questionnaire, participants will select an Investment Option for their Plan accounts.

Step 4:  Plan participant education.  Employees receive general investor educational information, such as information regarding saving for retirement, asset allocation, model portfolios and the Investment Options available to the Plan’s participants.

Step 5:  Partner with designated RecordKeeper and/or Third Party Administrator.  On an ongoing basis, we work with the Plan sponsor’s Recordkeeper and/or Third Party Administrator (“TPA”) to ensure that the selected investment options are properly implemented.

Step 6:  Invest and Monitor Fund Assets.  With the Plan sponsor’s permission, we give instructions to the Recordkeeper and/or TPA to do the following:

• Invest the underlying assets of each Investment Option in a mix of investments in the Underlying Funds
• Periodically rebalance the mix of investments in the Underlying Funds for each Investment Option
• Strategically reallocate the mix of investments, and when necessary, modify the allocations for the Plan Investment Option

Wealth Management Solutions

Integrative Wealth Management Solutions

Within the concept of “wealth management advisory services” we believe that our “Integrative Wealth Management Solutions” approach is a leading-edge innovation within the wealth management industry.  INOVE defines “Integrative Wealth Management Solutions” as the ability to connect where you want to go financially with who you are as a person.  Our process of holistic life analysis and goals-centered planning, combined with the unique ability to integrate your asset management goals with your value system, provides INOVE with the opportunity produce sustainable investment returns while managing portfolio risk and reducing investor stress.

Wealth Management Solutions

IAM provides comprehensive wealth management, institutional asset management, comprehensive financial planning, financial education and consulting services to individuals; trusts; family offices; estates; charitable organizations; foundations; small business pension, retirement and profit-sharing plans.

Integrative Financial Planning and Investment Consulting Services

INOVE Asset Management offers integrative financial planning and investment consulting services designed to achieve stated financial goals and objectives. Financial plans may be comprehensive or may focus only on specific areas of client concern or a particular investment account. In general, individual client financial planning or investment consulting may include the following:

• cash flow analysis
• investment policy statement creation
• asset and liability analysis
• long and short-term goal setting
• life and disability insurance needs analysis
• variable and fixed annuity exchange analyses
• long term care needs-based analysis
• income tax analysis and strategic tax planning
• estate plan analysis
• education funding analysis
• risk tolerance assessment
• special needs planning
• planned giving analysis
• small business pension plan analysis and design
• retirement plan assessment and analysis (with Monte Carlo analysis)
• investment portfolio holdings-based analysis and asset allocation review

INOVE Asset Management Privacy Policy

Privacy Policy

INOVE recognizes and respects the privacy of each of its customers and their expectations for confidentiality. The protection of customer information is of fundamental importance in our operation and INOVE takes seriously its responsibility to protect nonpublic personal information.

INOVE collects, retains and uses information that assists INOVE in providing the best service possible. This information comes from the following sources:

• Account agreements and other required forms
• Written, oral, electronic or telephonic communications and
•  Account and transaction histories with us, our affiliates, or others

INOVE does not disclose any nonpublic personal information about our customers or former customers to anyone, except as permitted by law. INOVE restricts access to nonpublic personal information about you to those employees, affiliates, and service providers who need to know that information to provide INOVE products or services to you. INOVE requires that these entities limit the use of the information provided to the purposes for which it was disclosed and as permitted by law.

INOVE maintains physical, electronic, and procedural safeguards that comply with federal standards to guard your nonpublic personal information.

Participation or Interest in Client Transactions and Personal Trading

It is the express policy of INOVE that no person employed by INOVE may purchase or sell any security prior to a transaction(s) being implemented for an advisory account, and therefore, preventing such employees from benefiting from transactions placed on behalf of advisory accounts. INOVE employees may buy or sell securities identical to those recommended to customers for their personal accounts. As these situations represent a conflict of interest, INOVE has established the following restrictions in order to ensure its fiduciary responsibilities:

1. A director, officer or employee of INOVE shall not buy or sell securities for their personal portfolio(s) where their decision is substantially derived, in whole or in part, by reason of his or her employment unless the information is also available to the investing public on reasonable inquiry. No person of INOVE shall prefer his or her own interest to that of the advisory client.
2. INOVE maintains a list of all securities holdings for itself, and anyone associated with this advisory practice with access to advisory recommendations. These holdings are reviewed on a regular basis by an appropriate officer/individual of INOVE.
3. INOVE emphasizes the unrestricted right of the client to decline to implement any advice rendered, except in situations where INOVE is granted discretionary authority of the client’s account.
4. INOVE emphasizes the unrestricted right of the client to select and choose any broker or dealer, and/or insurance company(s) he/she wishes.
5. INOVE requires that all individuals must act in accordance with all applicable Federal and State regulations governing registered investment advisory practices.
6. Any individual not in observance of the above may be subject to termination.