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ibbotson aggressive growth etf asset allocation portfolio - Description
Cusips: Class I - 317613 701 Class II - 317613 800
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Investment Objective
The Portfolio seeks to provide investors with capital appreciation.
The Portfolio invests, under normal circumstances, at least 80% of its net assets plus the amount of any borrowings for investment purposes, in securities of exchange-traded funds (each, an "Underlying ETF" and collectively, the "Underlying ETFs"). The Portfolio will notify you in writing at least 60 days before making any changes to this policy. For the purposes of this 80% investment policy, assets are measured at the time of purchase.
Principal Investment Strategies
The Portfolio is a "Fund-of-Funds" and seeks to achieve its investment objective by investing primarily in a portfolio of Underlying ETFs. Each Underlying ETF, in turn, in an attempt to approximate the investment performance of its benchmark, invests in a variety of U.S. and foreign equity, debt, commodities, money market securities, futures, and other instruments. The investment policies of the various Underlying ETFs are described generally in the section called "Information about the Underlying ETFs" in this Prospectus.
Under normal market conditions, the Portfolio typically expects to allocate its investments in Underlying ETFs such that 10% of such allocation is invested in Underlying ETFs that invest primarily in fixed-income securities and money market instruments ("Fixed-Income Underlying ETFs") and approximately 90% of such allocation is invested in Underlying ETFs that invest primarily in equity securities of large, medium and small sized companies, and may include other investments such as commodities and commodity futures ("Non-Fixed Income Underlying ETFs"). However, under normal market conditions, the Portfolio typically may, from time to time, invest approximately 0-20% of such allocation in Fixed-Income Underlying ETFs and 80-100% of such allocation in Non-Fixed Income Underlying ETFs.
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The Portfolio may invest its assets in the Underlying ETFs that collectively represent the asset classes in the target asset allocation ranges described below. The following is a general guide regarding the anticipated allocation of assets among these asset classes. Subject to the approval of ALPS Advisers, Inc., the adviser to the Portfolio (the "Adviser"), Ibbotson Associates, Inc., as the subadviser to the Portfolio (the "Subadviser"), may change these asset classes and the allocations from time-to-time without the approval of or notice to shareholders.
| Asset Class |
Percentage of Portfolio Holdings
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| Large Cap Growth U.S. Equities |
0-50%
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| Large Cap Value U.S. Equities |
0-50%
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| Small Cap Growth U.S. Equities |
0-25%
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| Small Cap Value U.S. Equities |
0-25%
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| Real Estate Investment Trusts |
0-25%
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| International (non-U.S.) Equities |
0-40%
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| Emerging Markets Equities |
0-10%
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| Core U.S. Bonds |
0-10%
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| Treasury Inflation Protected Securities |
0-5%
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| Short-Term Bonds |
0-10%
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| Commodities |
0-10%
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| Cash |
0-10%
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Principal Investment Risks
Like all investments in securities, you risk losing money by investing in the Portfolio. The main risks of investing in the Portfolio are:
Management Risk. The Subadviser’s skill in choosing appropriate investments will play a large part in determining whether the Portfolio is able to achieve its investment objective. If the Subadviser’s projections about the prospects for individual Underlying ETFs are incorrect, such errors in judgment by the Subadviser may result in significant losses in the Portfolio’s investment in such security, which can also result in possible losses overall for the Portfolio. The Adviser is newly formed and has never managed a mutual fund.
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ETF Risks. When the Portfolio invests in Underlying ETFs, it will indirectly bear its proportionate share of any fees and expenses payable directly by the Underlying ETF. Therefore, the Portfolio will incur higher expenses, many of which may be duplicative. In addition, Underlying ETFs are also subject to the following risks: (i) the market price of an Underlying ETF’s shares may trade above or below its net asset value; (ii) an active trading market for an Underlying ETF’s shares may not develop or be maintained; (iii) the Underlying ETF may employ an investment strategy that utilizes high leverage ratios; (iv) trading of an Underlying ETF’s shares may be halted if the listing exchange’s officials deem such action appropriate, the shares are delisted from the exchange, or the activation of market wide “circuit breakers” (which are tied to large decreases in stock prices) halts stock trading generally; or (v) the Underlying ETF may fail to achieve close correlation with the index that it tracks due to a variety of factors, such as rounding of prices and changes to the index and/or regulatory policies, resulting in the deviating of the Underlying ETF’s returns from that of the index. Some Underlying ETFs may be thinly traded, and the costs associated with respect to purchasing and selling the Underlying ETFs (including the bid-ask spread) will be borne by the Portfolio.
Fixed Income Risks.
Credit Risk. The issuer of a fixed income security may not be able to make interest and principal payments when due. Generally, the lower the credit rating of a security, the greater the risk that the issuer will default on its obligation.
Change in Rating Risk. If a rating agency gives a debt security a lower rating, the value of the debt security will decline because investors will demand a higher rate of return.
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Interest Rate Risk.
The value of the Portfolio may fluctuate based upon changes in interest rates and market conditions. As interest rates increase, the value of the Portfolio’s income producing investments may go down. For example, bonds tend to decrease in value when interest rates rise. Debt obligations with longer maturities sometimes typically offer higher yields, but are subject to greater price movements as a result of interest rate changes than debt obligations with shorter maturities.
Duration Risk. Prices of fixed income securities with longer effective maturities are more sensitive to interest rate changes than those with shorter effective maturities.
Equity Securities Risk. Through its investments, the Portfolio will be exposed to equity securities risk. The prices of stocks can rise or fall rapidly in response to developments affecting a specific company or industry, or to changing economic, political or market conditions. The Portfolio’s investments may decline in value if the stock markets perform poorly. There is also a risk that the Portfolio’s investments will underperform either the securities markets generally or particular segments of the securities markets.
Foreign Securities Risk. Foreign securities are subject to additional risks not typically associated with investments in domestic securities. These risks may include, among others, country risks (political, diplomatic, regional conflicts, terrorism, war, social and economic instability, currency devaluations and policies that have the effect of limiting or restricting foreign investment or the movement of assets), different trading practices, less government supervision, less publicly available information, limited trading markets and greater volatility.
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Emerging Markets Risk. To the extent that Underlying ETFs invest in issuers located in emerging markets, the risk may be heightened by political changes, changes in taxation, or currency controls that could adversely affect the values of these investments. Emerging markets have been more volatile than the markets of developed countries with more mature economies.
Commodity Risk. Some of the Underlying ETFs may invest directly or indirectly in physical commodities, such as gold, silver and other precious minerals. Thus, the Portfolio may be affected by changes in commodity prices. Commodity prices tend to be cyclical and can move significantly in short periods of time. In addition, new discoveries or changes in government regulations can affect the price of commodities.
Sector Risk. The Portfolio may have overweighted positions in Underlying ETFs that invest in particular sectors. A particular market sector can be more volatile or underperform relative to the market as a whole. To the extent that the Portfolio has overweighted holdings within a particular sector, the Portfolio is subject to an increased risk that its investments in that particular sector may decline because of changing expectations for the performance of that sector.
Concentration Risk. To the extent that ETFs in which the Portfolio invests concentrate their investments in a particular industry or sector, the Portfolio’s shares may be more volatile and fluctuate more than shares of a fund investing in a broader range of securities.
Derivatives Risk. Some Underlying ETFs may use derivative instruments. The value of these instruments derives from the value of an underlying asset, currency or index. Investments in these funds may involve the risk that the value of derivatives may rise or fall more rapidly than other investments, and the risk that an underlying fund may lose more than the amount invested in the derivative instrument in the first place. Derivative instruments also involve the risk that other parties to the derivative contract may fail to meet their obligations, which could cause losses.
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Turnover Risk. The Portfolio is actively managed. Although its portfolio turnover rate is generally anticipated to be low, it may from time to time be high. A higher rate of portfolio turnover increases brokerage and other expenses, which are borne by the Portfolio and its shareholders. Higher costs associated with increased portfolio turnover may offset gains in the Portfolio’s performance.
Non-Diversification Risk. The Portfolio is non-diversified under the Act. In addition, the ETFs in which the portfolio invests may also be non-diversified. This means that there is no restriction under the Act on how much the Portfolio or the Underlying ETF may invest in the securities of a single issuer. Therefore, the value of the Portfolio’s shares may be volatile and fluctuate more than shares of a diversified fund that invests in a broader range of securities.
Market Timing Risk. The Portfolio may invest in shares of Underlying ETFs which in turn may invest in securities such as small-capitalization stocks or securities listed on foreign exchanges that may be susceptible to market timing or time zone arbitrage. Because the Portfolio does not consider Underlying ETFs’ policies and procedures with respect to market timing, performance of the Underlying ETFs may be diluted due to market timing and, therefore, may affect the performance of the Portfolio.
Real Estate Investment Trust (REIT) Risk. Through its investments, the Portfolio may be exposed to risks similar to those associated with direct investments in real estate, including changes in interest rates, overbuilding, increased property taxes, or regulatory actions.
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ALPS Distributors, Inc. is the distributor for the Ibbotson Portfolios.
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