ARM Financial LLC
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| SPY* | VIXITAP** | |
| 1 year | 29% | 26% |
| 3 year | 16% | 15% |
| 5 year | 18% | 15% |
| 10 year | 7% | 11% |
| 20 year | 9% | 14% |
Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program.
One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results.
SPY VIXITAP
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Based on our analysis, S&P500 options prices are a meaningful indicator of the distribution of subsequent market returns.
Our quantitative market timing program, the VIX Indicated Traditional Asset Program (VIXITAP), uses an algorithm and S&P500 options prices to allocate client accounts. When options prices indicate that stock market returns are likely to have positive returns over the coming months, client accounts hold an S&P500 index fund. Otherwise client accounts hold a total bond market index fund.
The VIXITAP is intended for long term investors. As shown in the model performance, the long term historical performance of the model is better than the S&P500. However, in the historical performance you can see several multi-year periods where the model underperformed the S&P500. The fundamental strength of the program is avoiding the losses of bear markets.
The investment program may lose money.
There is the risk that the decisions indicated by the model may not be effective in the future despite its good hypothetical performance on historical data. Past performance is not necessarily an indicator of future performance. The Program model does not take into account any valuation information or fundamental analysis. As such, there is a risk that the model is ignoring important factors that may influence the long term performance of the S&P 500 index.
The CBOE VIX index has existed for only 21 years and in its present form for only 11 years. Using historical options data, the VIX index can be calculated back to 1986. However, that is still a fairly short time period from which to project long term performance.
Assuming that the natural success rate for timing decisions is 50%, there is a 5% chance that the Program’s hypothetical out-performance is simply good luck.
The investment program uses only S&P 500 index funds and total bond market funds. The Program securities may under-perform the returns of other securities or funds that track other industries, groups of industries, markets, asset classes or sectors, including other ARM Financial investment programs. Various types of securities or indexes tend to experience cycles of out-performance and under-performance in comparison to the general securities markets.
There is the risk that the advisor may experience technical difficulties that prevent it from executing the reallocation indicated by the program model. Limited advisor discretion: The investment decisions for this program are strictly dictated by a quantitative model. The investment policy of the program requires the advisor to base the Program account allocations on the model.
Account minimum: $50,000
Management Fee: 1.5% annually
Account custodian: Interactive Brokers LLC
Account types: Retirement and Non-Retirement accounts for individuals
Financial advising services: accounts funded with more than $200,000 are eligible for financial advising services