Important Statement Disclosures

Benchmarks

The following are the components of benchmarks that are utilized in Charter Oak Capital Management Portfolio Review Reports.  Please note that it is not possible to invest directly into indexes.

Conservative Benchmark – 30% MSCI (ACWI) All Country World Index Net, 68% Bloomberg Barclays US Bond Aggregate, 2% 3-Month FTSE US Treasury Bill Index

Moderate Benchmark – 49% MSCI (ACWI) All Country World Index Net, 49% Bloomberg Barclays US Bond Aggregate, 2% 3-Month FTSE US Treasury Bill Index 

Growth Benchmark - 69% MSCI (ACWI) All Country World Index Net, 29% Bloomberg Barclays US Bond Aggregate, 2% 3-Month FTSE US Treasury Bill

Index Definition

S&P 500 Index has been widely regarded as the best single gauge of the U.S. equities market.  The index includes 500 leading companies in leading industries of the U.S. economy. Although the S&P 500 focuses on the large cap segment of the market, with approximately 75% coverage of U.S. equities, it is also an ideal proxy for the total market.

Bloomberg Barclays US Bond Aggregate is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, fixed-rate agency MBS, ABS and CMBS (agency and non-agency).

3- Month FTSE US Treasury Bill - Cash Index is designed to measure the return equivalents and yield averages for the United States 3-month treasury bills, which is generally accepted as standard rate of return on cash investments.

MSCI ACWI Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets around the globe, including the United States.  The MSCI ACWI consists of 45 country indices comprising 24 developed and 21 emerging market country indices.

Performance Return Calculation Definition

Internal Rate of Return (IRR) represents a portfolio’s actual performance and rate of return.  It takes into account the size of any cash flows that occur during the reporting period as well as the length of time that each cash flow affects a portfolio.  It also gives greater weight to those time periods when more money is invested in a portfolio.  IRR does not measure portfolio strategy because the IRR is affected by the adding or withdrawing money. 

Time-Weighted Return (TWR) measures performance by weighing every time period equally, regardless of the amount of money invested during the reporting period and minimizes the effect of cash flows on a portfolio’s performance.  TWR is used to measure the performance and compare this performance to a benchmark.  TWR is the only calculation that fairly compares the performance of one money manager with the performance of another or with an index.  It does not represent a portfolio’s actual return if significant contributions and withdrawals occur during a reporting period.  Instead, a TWR represents an investment strategy and hypothetically assumes that there were no large additions or withdrawals.