Important disclaimers related to Opus
Risk Rating Rationale
Several factors may impact investors' risk tolerance, including their time horizon, investable assets, goals, and personal attitude towards investment gains and losses. Investors with longer time horizons, greater investable assets, goals that don’t require near-term liquidity, and comfort with short-term losses will have higher risk tolerance. Time horizon, investable assets, and goals impact an investor's ability to take on risk, while an investor's attitude toward gains and losses affects an investor's willingness to take on risk.
Standard deviation is a measure of volatility, or risk, of an investment. The annualized standard deviation of an investment is the typical amount that the investment's returns vary from the mean of the returns over a selected period, standardized to a period of a year. When an investment's returns vary widely (i.e., when the investment is riskier), the standard deviation is high. The tradeoff is that strategies with higher standard deviations often have higher expected returns. By focusing on volatility, Opus can match investors with a portfolio that seeks to deliver growth while matching their willingness and ability to handle fluctuations in account value.
In our view, a conservative investor would be served best by reducing volatility relative to this benchmark by holding a more conservative allocation that includes short-term treasuries, TIPs, and diversifying strategies. Moderate investors are best served roughly matching the volatility of a 60-40 portfolio, while aggressive investors can take on more risk. In general, we believe a key benefit of Opus is its broad diversification, and the volatility target of our aggressive portfolio is well below that of a 100% equity portfolio.
Selecting Opus fund for you
Each version of the Opus strategy targets a specific volatility level measured by annualized standard deviation. Investors unwilling to bear short-term swings in account value may not wish to invest in the aggressive strategy.
Composer Fees and Performance
Returns include reinvested dividends but do not include monthly Composer fees, which are $30 per month or $288 per year. Opus may experience losses as well as gains and, at times, may be more volatile and have a lower Sharpe ratio than its benchmark.
Backtested Performance
Backtested results do not represent actual trading and may not reflect the impact of material economic and market factors (e.g., liquidity impact on execution costs). In our backtest, we estimate that bid-ask spreads and liquidity impact are five basis points on each trade, but actual results could vary substantially from this estimate. For more information, please review Backtest Basics.
Taxes
Opus is an actively managed portfolio that invests in and trades ETFs and individual securities. These trades may generate short and long-term capital gains and losses that can materially impact an investor's tax liability.
In addition, Opus invests in ETFs that may issue K-1s, an IRS tax form required for partnership income. K-1s require separate disclosure during tax filing. Consult a tax advisor to evaluate your personal tax situation.