Investment Advisor

Oceanic Capital

Oceanic Capital

Education University of Vermont, BA
Qualifications 25 year professional and registered investment advisor

Global Diversified Conservative

Exceptions
Sell Discipline
Allocation Discipline
Research
Approach
Summary

The model invests in multiple asset classes: domestic, international and emerging market equities, fixed income, commodities and energy, real estate and foreign exchange. The model uses both individual stocks and ETFs, but does not use leverage. Individual assets, sectors or asset classes having a high degree of volatility will play little or no role in this fund. In addition, the portfolio will not pursue tactical market opportunities such as market timing or technical factors.

In this portfolio we strive to create an allocation of asset classes that delivers the efficient frontier - a combination of assets which will deliver the best returns for a given level of risk. Keeping volatility controlled will be a focus. We will not be using any market timing strategies nor any leverage, and will rebalance every six months. Highly volatile individual stocks will be left out in favor of ETFs or more established names. Liquidity will also be a major concern and will figure prominently in all asset selections.

OCM research focuses at two key levels: allocation of assets and asset selection within the desired allocations. Asset allocation research looks primarily at correlation of investment performance over various horizons.

Once a proper asset allocation has been established, OCM looks at each sector fundamentally. We tend to favor “category killer” companies that benefit from strong competitive barriers, have high liquidity and price transparency.

In addition to using traditional Wall Street research from the major investment banks, OCM conducts its own research and also purchase outside institutional research for “hard dollars. Our sources include The Gartman Letter, Grants, Financial Times, Bloomberg, Barron’s and The Dow Theory Letter, among others.

OCM’s investment approach is founded on the goal of “diversification optimization".

To achieve that goal, our process examines the relative performance and historic correlations of different asset classes and sectors. We use non-traditional and uncorrelated assets in an effort to offset portfolio risk and volatility and to stabilize returns.

In this fund we typically have 15-20 positions and no position is allowed to exceed 10% of the portfolio. Allocation rebalancing is conducted less frequently in order to maintain a conservative, longer term discipline but is reviewed at least annually.

Because of the longer investment horizon of this portfolio, the lower investment turnover necessitates a broader sell discipline. Consequently, we seek to avoid over-reacting to market or position moves that may be caused by disruptive or temporary factors. If a position or asset class advances unexpectedly fast against its targeted investment performance, we may execute an early rebalancing via a partial reduction of the exposure. It is expected that this portfolio will not have the same volatility as the other two OCM portfolios.

As a conservative portfolio, investment choices are based on long-term investment horizons and long term performance expectations. As a result, there are almost no exceptions to our investment discipline in this fund.

Approach Macro
Asset class Multi Asset Class
Geography Global
Subscribers16

Replicability

100.0%

Replicable

Top 5 Holdings View all

28.2%

5.7%

5.4%

4.4%

3.8%

Model commentary

Don't try to time this chaotic market

14 May 2012

What keeps us awake at night still is the drama that could unfold in Europe this summer.
Stick with cash-generating stocks, bonds and gold 16 April 2012
Why I'm Still Bullish on Gold for the Long Haul 2 March 2012
Gold will continue to rise and U.S. stocks remain … 19 February 2012
Trimming our bonds, redeploying to equities 17 February 2012

Performance detail

Manager
Dow Jones Moderate Conservative
S&P 500

30D 90D 365D SI

Performance

Inception January 31, 2011

as of May 23, 2012	Manager	Dow Jones Moderate Conservative	S&P 500	Average Subscriber
Past 30 days	-2.4%	-1.8%	-3.5%	-2.5%
Past 90 days	-5.8%	-2.3%	-3.3%	-6.0%
Past 365 days	1.1%	1.7%	0.2%	-0.6%
Since Inception (Annualized)	5.6%	3.2%	1.9%	-
2012 (YTD)	-1.0%	1.9%	4.9%	-1.4%

Risk Metrics

Last 365 Days

as of May 23, 2012	Manager	Dow Jones Moderate Conservative	S&P 500
Best 30 days	5.7%	5.4%	13.6%
Worst 30 days	-5.9%	-5.2%	-16.7%
Volatility	9.5%	7.6%	23.2%
Sharpe Ratio	0.10	0.20	0.00
Sortino Ratio	0.14	0.28	0.00
Maximum Drawdown	-6.6%	-6.8%	-18.8%
Value-at-risk (95%, 1 week)	-2.2%	-1.8%	-5.4%

	vs. Dow Jones Moderate Conservative	vs. S&P 500
Information Ratio	-0.08	0.04
Alpha	0.2%	0.9%
Beta	0.78	0.22
R-Squared	0.40	0.30

Latest transactions view all

Average trades per month 1.0

Executed	Symbol	Security	Replicable	Type	Price
02/21/12	VNQ	Vanguard REIT ETF		Buy	$61.36
02/21/12	UUP	PowerShares DB US Dollar Index Bullish Fund		Buy	$22.04
02/21/12	TLH	ISHARES BARCLAYS 10-20 YEAR		Sell	$130.12
02/21/12	EEB	GUGGENHEIM BRIC ETF		Buy	$41.02
02/21/12	EPP	iShares MSCI Pacific ex-Japan Index Fund		Buy	$43.91
02/21/12	WMT	Wal-Mart Stores Inc		Buy	$59.83
02/21/12	PG	Procter & Gamble Co/The		Buy	$64.50
02/21/12	INTC	Intel Corp		Buy	$27.15

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$10,000 subscription min
1.1% fee

Important Information

1. Past performance is no guarantee of future results.

2. Performance of the model manager's account is calculated by Covestor on a daily time-weighted basis, including cash, dividends and earnings distributions, and broker commissions. Manager returns include trades that fail Covestor's trading rules, do not reflect any Covestor suitability or risk score restrictions and are exclusive of Covestor fees. More

3. Average subscription returns ("Avg Sub" or "Avg Client") are calculated by Covestor and are composed of the average, daily, time weighted returns of all active subscriptions to the underlying model. These daily average returns are then linked together for the timeframe requested. In addition, these returns include cash, dividends and earnings distributions, brokerage commissions, Covestor advisory fees, and reflect individual client suitability and risk score restrictions. More

4. All graph data is as of the end of day for the referenced period, unless otherwise specified. The subscription minimum is the minimum subscription required to follow a particular model. The minimum amount is determined by Covestor, based on the characteristics of the underlying model. It should not be considered as specific investment advice for your investment situation.

5. Benchmark returns have been calculated by Covestor using a time-weighted calculation of daily index valuations and do not include cash, dividends and earnings distributions, or transaction costs. More

6. Leverage indicates the level of margin utilized and is calculated by dividing gross exposure by portfolio net liquidation value.

7. All Model Manager information including personal data, profiles, strategies, monthly investment reports, and historical results outside of Covestor has been provided by the Model Manager. Covestor makes no representation or warranty of its accuracy, completeness or relevance and it does not represent the opinions of Covestor. Transaction history is available upon request. Model classifications (Approach, Asset Class) are provided by Covestor, and are intended to serve as a general guide.

8. Top Replicable Holdings: These securities are currently held in the model manager's brokerage account. Those marked as "Replicable Holdings" currently pass Covestor's trading rules, subject to individual client constraints. Eligibility for replication may change over time. Actual client subscription holdings may vary.

9. Latest Transactions: These transactions were executed in the model manager's brokerage account. Those marked as "Replicable" () passed Covestor's trading rules and were eligible for replication at the time of execution, subject to individual client constraints. Eligibility for replication may change over time. Actual client subscription trade activity may vary.

10. S&P 500 Index is an unmanaged index compiled by Standard & Poor´s Corp. Index returns do not reflect any management fees, transaction costs or expenses. Individuals cannot invest directly in an Index. S&P 500 index data: S&P 500 Copyright © 2012.

11. Dow Jones index data: CME Group Index Services, LLC 2012

Background provided by the manager
Oceanic Capital Form ADV II

Oceanic Capital