Beacon Capital Management
View Online
For advisor use only. Not to be used with clients.
fundamentally improving the science of investing
market spotlight | monthly review

Following an initial downturn largely in response to June’s Brexit vote, equities rebounded during the month of July. The first full week of the month saw each of the indexes listed here improve over the prior week, led by the Nasdaq, which gained almost 2.0%. The Dow recouped just about all of the value lost right after the vote. Long-term bond yields, highlighted by 10-year Treasuries, continued to slide–falling 90 basis points from their year-end value. By the week ended July 15, money flowed from long-term bonds (10-year Treasuries yield increased by 18 basis points) into equities as the Dow posted a 2.0% weekly gain, while the Russell 2000 jumped almost 2.4%. Also helping boost stocks was a much-improved labor report, which saw the addition of almost 290,000 new jobs in June. As the month wore on, light trading slowed the growth of the indexes listed here with the exception of the Nasdaq, which ended the week of the 22nd about 1.5% ahead of its value from the prior week. As the month of July came to a close, each of the indexes listed here posted robust gains, led by the Nasdaq and the Russell 2000, each gaining about 6.0% over their June closing values.

Long-term bond yields fluctuated during the month, ultimately closing at essentially the same yield as June’s closing return. The price of gold (COMEX) increased by month’s end, selling at $1,357.90–about $33 over June’s end-of-month price of $1,324.90.

did you know?

William Sharpe, winner of the Nobel Prize, created the Sharpe Ratio to determine the relative strength of a portfolio. Generally, the higher the Sharpe Ratio, the more attractive the risk-adjusted return. In other words, a portfolio with a higher Sharpe Ratio is more efficient in generating returns for a given level of risk.

To learn more about combining the unique assets and risk management strategies of the Beacon Vantage 2.0 and 3.0 Portfolios, download the Efficient Frontier example from the Advisor Toolbox illustrating three potential blends and their given Sharpe Ratios.

bright ideas
A Hedge Against Sideways Markets
Introducing Beacon Vantage 3.0 Portfolios

August 15, 2016, was yet another watershed moment for investors as all three major U.S. indexes closed the day at record highs.  This was the second time in less than a week that the S&P 500, Nasdaq and Dow Jones hit high-water marks on the same day. And yet, cautious optimism remained the prevailing mood around Wall Street. When asked about the bull rush, one analyst called this current rally merely a “hunt for yield.” Another strategist claimed the markets’ rise hinged on “the no-alternative factor.” These lukewarm endorsements would reflect investor activity over the next five days. As the week played out, choppy trading saw equities finish flat. In fact, by Friday, August 20, equities were off slightly from the all-time highs reached on Monday.

With today’s volatile markets continuing their rapid cycle of highs and lows, Beacon maintains its three-pillar approach in working towards capturing market gains while minimizing risk. We developed Beacon Vantage 2.0 portfolios based on these three layers of protection for investors: To maximize diversification; to provide downside protection; and to maintain discipline through mechanical execution.

In examining Beacon 2.0’s historical returns, we understand the portfolios’ strengths—it is designed to protect against a severe bear market. We saw these severe bears in 2000-2002 and 2007-2009. One of our advisors in the field even coined the phrase, “If you think there’s going to be one bear market in your lifetime, then 2.0 is the portfolio for you.”

In sideways markets, as we have seen of late, 2.0 has done well hanging with the market, but with about half the risk. However, due to the structure of 2.0, we may also experience some missed opportunities in these recent market conditions, which is why we have introduced our Beacon Vantage 3.0 portfolios.

Diversification with Downside Protection

As you know, the 2.0 portfolios allocate assets equally across every sector in the market through the ten traditional sectors as historically identified by the S&P, as well as real estate. In 2.0, we are looking for protection first and don’t make any bets on which sector will do well or poorly over the next month. This protects us against bubbles like we experienced in the tech industry in the late 90s.

In our 3.0 portfolios, we maintain a similar approach through the equal sector diversification, but we have also layered a new loss reduction risk management strategy at the individual sector level. This allows us more flexibility and the ability to track new trends as they develop while continuing to mechanically limit the impact of extreme market losses. Additionally, we have added a Vantage 3.0 Alternative Portfolio and a Vantage 3.0 Bond Portfolio to our standard risk-based portfolios to offer new, expanded diversification opportunities.

Strength in Numbers

While both 2.0 and 3.0 portfolios can work independently, where they really shine is when they are pulled together as one unified portfolio. Together they can work to create a new level of efficiency and consistency. We are already seeing our advisors take advantage of this blending ability with accounts that are at a roughly 50-50 split between the 2.0 and 3.0 portfolios. We look at this melding together as the next stage of portfolio management, not only diversifying our underlying investments but now also diversifying our risk management strategies as well.

For more information on Vantage 3.0 Portfolios:

Download fact sheets and overviews from the Advisor Toolbox on

Contact your wholesaler if you have any additional questions or material needs

• Register for the upcoming webinar to get your individual questions answered





beacon news

Don’t miss next week’s webinar:

An Introduction to the Beacon Vantage 3.0 Portfolios

3 PM ET/ 2 CT / 1 MT / Noon PT

Tuesday, August 30

Register Now!



Beacon Capital Management, Inc. is an investment advisory firm registered with the Securities and Exchange Commission. Additional information about Beacon Capital Management is also available on the SEC’s website at under CRD number 120641. Beacon Capital Management only transacts business in states where it is properly registered, or excluded or exempted from registration requirements.

Click to unsubscribe

7777 Washington Village Drive, Suite 280, Centerville, OH 45459
P: 866.439.9093 | F: 937.424.4825