A Ten-Year Performance Track Record
By diversifying across global capital markets, dynamically adjusting portfolio allocations, and striving to capture much of the up markets and less of the down, the proprietary Windhaven® investment approach has helped deliver long-term performance while attempting to reduce losses during turbulent bear markets since 2002.
Hypothetical growth of $100,000 assumes client was invested in Windhaven beginning 1/1/2002. Calculations based on historical composite performance. Benchmark information is based on historical index performance. You cannot invest directly in an index. Both assumes reinvestment of dividends and capital gains and does not reflect the effects of taxes.
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Past performance is not indicative of future returns, and the value of investments and the income derived from them can go down as well as up. Future returns are not guaranteed, and a loss of principal may occur.
a. The time period shown is the longest time period for which all three Windhaven® strategies existed concurrently.
b. Performance is based on the actual return of the respective Windhaven Diversified Composite, net of all fees and expenses.
c. The Global Conservative Benchmark is comprised of 20% MSCI All Country World Index (ACWI), 75% Barclays U.S. Aggregate Bond Index, and 5% S&P GSCI Total Return Index (GSCI).
d. Blended Benchmark is comprised of 60% S&P 500® Total Return Index and 40% Barclays U.S. Aggregate Bond Index.
e. The Global Growth Benchmark is composed of 55% MSCI ACWI, 40% Barclays U.S. Aggregate Bond Index, and 5% S&P GSCI Total Return.
f. The Global Aggressive Benchmark is comprised of 70% MSCI ACWI, 20% Citigroup World Government Bond Index (CWGBI), and 10% S&P GSCI Total Return.
Please refer to Windhaven's Form ADV Part 2 for more information.
Indexes are unmanaged and do not incur management fees, costs, and expenses.
Data source: Bloomberg.
Windhaven’s risk-management process includes an effort to monitor and manage risk, but should not be confused with (and does not imply) low risk or the ability to control risk.
There are risks associated with any investment approach, and Windhaven strategies have their own set of risks to be aware of. First, there are the risks associated with the long-term core strategic holdings for each of the strategies. The more aggressive the Windhaven strategy selected, the more likely the strategy will contain larger weights in riskier asset classes, such as equities. Second, there are distinct risks associated with Windhaven Strategies' shorter-term dynamic allocations, which can result in more concentration towards a certain asset class or classes. This introduces the risk that Windhaven could be on the wrong side of a tactical over- or under-weight, thus resulting in a drag on overall performance.
International investments involve additional risks, which include differences in financial accounting standards, currency fluctuations, political instability, foreign taxes and regulations, and the potential for illiquid markets. Investing in emerging markets may accentuate these risks.
Diversification strategies do not ensure a profit and do not protect against losses in declining markets.
The Windhaven Diversified Conservative, Diversified Growth, and Diversified Aggressive strategies’ performance, portfolio characteristics, volatility, and other data shown were derived from the Windhaven Diversified Conservative, Diversified Growth, and Diversified Aggressive Composites. The composite performance results for the Windhaven strategies referred to herein include all discretionary, fee-paying accounts within the Diversified Conservative, Diversified Growth, and Diversified Aggressive strategies, including those of clients who are no longer with the firm. Accounts are included in each composite after the first full month under management up to the present or until the cessation of the client relationship with Windhaven. Investment results are time-weighted performance calculations representing total return. Composites are valued monthly, and returns are asset-weighted by using beginning-of-month market values plus weighted cash flows. Monthly geometric linking of performance results is used to calculate annual returns. Total return figures are calculated using trade date accounting. All realized and unrealized capital gains and losses, as well as all dividends and interest from investments and cash balances, are included. The performance figures presented are net of brokerage commissions and all other expenses, including the firm's investment advisory fee.
The investment results shown are not necessarily representative of an individually managed account’s rate of return, and differences can occur due to factors such as the timing of initial investment, client restrictions, cash movement, etc. Securities used to implement the strategies can differ based on account size, custodian, and client guidelines.
Benchmark and Performance
Criteria for choosing the benchmarks for each Windhaven strategy are as follows:
Diversified Conservative—The Barclays U.S. Aggregate Bond Index was chosen as the benchmark for the Diversified Conservative strategy based on the approximate equivalent risk between the benchmark and the strategy and because clients will generally use the Diversified Conservative strategy as a substitute for or a complement to a bond portfolio.
Diversified Growth—A blended benchmark (60% S&P 500 Total Return Index and 40% Barclays U.S. Aggregate Bond Index) was chosen as the benchmark for the Diversified Growth strategy based on the approximate equivalent risk between the benchmark and the strategy and because clients will generally use the Diversified Growth strategy as a substitute for a “balanced fund.” Our target risk for the Diversified Growth strategy is “balanced fund” risk.
Diversified Aggressive—The S&P 500 Total Return Index was chosen as the benchmark for the Diversified Aggressive strategy based on the approximate equivalent risk between the benchmark and the strategy and because clients will generally use the Diversified Aggressive strategy as a substitute for or a complement to an all-equity portfolio.
The benchmarks listed above have not been selected to represent an appropriate benchmark with which to compare an investor’s performance, but rather are disclosed to allow for comparison of the investor’s performance to that of certain well-known and widely recognized indexes. Windhaven’s Diversified Conservative strategy does not invest solely in bonds, so its performance relative to the benchmark will be impacted by this difference. Windhaven’s Diversified Growth and Diversified Aggressive strategies do not invest in U.S. stocks to the same degree as the benchmark does, so their performance relative to the benchmark will be impacted by this difference. For example, in 2002 and 2008, the S&P 500 Total Return Index declined over 20%. Since Windhaven’s Diversified Growth and Diversified Aggressive strategies do not invest in U.S. stocks to the same extent as their benchmark, the impact of this decline on these strategies was less than it was on the benchmark.
The following global benchmarks for each Windhaven strategy were chosen for informational and comparative purposes:
Diversified Conservative—The Global Conservative benchmark is composed of 20% MSCI All Country World Index (ACWI), 75% Barclays U.S. Aggregate Bond Index, and 5% GSCI Total Return Index (GSCI), rebalanced monthly.
Diversified Growth—The Global Growth benchmark is composed of 55% MSCI All Country World Index (ACWI), 40% Barclays U.S. Aggregate Bond Index, and 5% GSCI Total Return Index (GSCI), rebalanced monthly.
Diversified Aggressive—The Global Aggressive benchmark is composed of 70% MSCI ACWI, 20% Citigroup World Government Bond Index (CWGBI), and 10% GSCI Total Return Index (GSCI), rebalanced monthly.
The global benchmarks reflect a more diversified mix of indexes. Windhaven's strategies may invest more heavily in real estate and currencies than their global benchmarks do, so their performance relative to the global benchmarks may be impacted by this difference. Windhaven’s strategies may not invest in stocks, bonds, and commodities to the same degree as their global benchmarks do, so their performance relative to the benchmarks will be impacted by this difference.
A reference to an index or benchmark does not imply that the Windhaven strategy will achieve returns, experience volatility, or have other results similar to the index. The composition of a benchmark index may not reflect the manner in which a Windhaven strategy is constructed in relation to expected or achieved returns, investment holdings, asset allocation guidelines, restrictions, sectors, correlations, concentrations, volatility, or tracking error targets, all of which are subject to change over time. You cannot invest directly in an index.
Windhaven Diversified strategies are available through Schwab's Managed Account Connection™ program. Please read Schwab's disclosure brochure for important information and disclosures relating to Schwab Managed Account Connection and Schwab Managed Account Service™.
Portfolio management is provided by Windhaven Investment Management, Inc. ("Windhaven"), a registered investment advisor. Windhaven and Charles Schwab & Co., Inc. are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation.