Disclosure, Risks & Definitions
This material is provided for informational purposes only and should not be construed as investment advice or an offer to sell or the solicitation of offers to buy any product or service. The information contained in this website is not intended to be used as a general guide to investing, or as a source of any specific investment recommendations. This website makes no implied or express recommendations concerning the manner in which any investment account should or would be handled. This information does not take into account the particular investment objectives, restrictions, tax and financial situation or other needs of any specific investor. Investors are urged to consult with their financial advisors before buying or selling any securities.
This website may include forward-looking statements. These statements may be identified by such words as “may”, “plans”, “expects”, “believes” and similar expressions, or by their context. These statements are made on the basis of current expectations and involve risks. Town Lake Capital Management disclaims any representation or warranty regarding the forward-looking information included in this website and expects that there will be differences between such forward-looking statements and the actual results, and some of those differences may be material.
The Fee Transparency chart is for illustrative purposes only and is purely hypothetical in nature. It is shown to demonstrate the mathematical implications of increased fees. HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN; IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR STRATEGY.
Diversification and Asset allocation do not guarantee that your investment will increase in value nor will they protect against a decline in value if market prices fall.
Investing has inherent risks that investors should know and understand. These risks include:
- Market Risk: Market risk is the possibility that the investment will decline in value so that when you sell the stock you may receive less than what you paid for it.
- Political Risk: National, international and political risk is the possibility that a country’s government will suddenly change its policies. Wars, embargos, coups and the appointments of individuals with unfavorable economic policies can impact the financial markets. Changes in tax structures as well as changes in bond or stock ratings can result.
- Economic Risk: Economic risk is the possibility that the economy will suffer a downturn as a whole. An economic downturn generally affects the market as a whole.
- Industry Risk: Industry risk is the possibility that a specific industry will suffer a downturn. Typically, industries related to the one experiencing problems would suffer as well.
- Currency Risk: Currency risk is the adverse variation in return or cost resulting from a change in currency exchange rates. This can also be described as the component of return volatility in a cross-border asset class that is due to changes in foreign exchange rates.
- Fixed-income securities are subject to market risk and interest-rate risk. If sold in the secondary market prior to maturity, investors may experience a gain or loss depending on interest rates, market conditions and the credit quality of the issuer.
- Interest-Rate Risk: Fixed-income securities are subject to market value fluctuation given changes in the level of interest rates. For example, if interest rates rise, the value of fixed-income securities could decline.
- Reinvestment Risk: Since many fixed-income securities pay interest semiannually, the reinvestment of coupon payments over the life of the bond can have a major impact on the bond’s total return.
- Credit/Event Risk: Certain fixed-income securities are subject to event risk and/or changes in credit quality. Issuers can experience increased competition, takeovers and other economic situations that may have adverse effects on the market value of securities.
- Call Provisions: When evaluating the purchase of a fixed-income security, one should be aware of any features that may allow the issuer to call the security.
Investing in Private Equity and Absolute Return strategies involve significant risks such as:
- Market and Interest Rate Risk –Markets can be volatile and are unpredictable. Thus, clients and investors could lose value during market movements – equities and commodities will go down in falling markets and fixed income instruments will go down in value during periods of rising interest rates.
- Specific Securities Risk –Individual securities are subject to numerous risks, including management, market, and credit risks which could result in loss in value of the securities. A portion of our investments are made in small and mid-cap securities whose values tend to be more erratic than with large cap companies. Derivatives, including hedging strategies and futures contracts, present risks related to significant price volatility and risk of default by a counterparty to a contract.
- Foreign Investment Risk –These investments are susceptible to political and economic instability of foreign countries, foreign currency, and exchange rate risks. Losses can result.
- Risks Associated with Active Management – Our success depends upon the investment skills and analytical abilities of the adviser to develop and effectively implement strategies that achieve our investment objective. Subjective decisions made by the advisor may cause us to incur losses or to miss profit opportunities on which it may otherwise have capitalized.
The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. Indices cannot be invested into directly.
Large Cap: A term used by the investment community to refer to companies with a market capitalization value of more than $10 billion. Large cap is an abbreviation of the term “large market capitalization”. Market capitalization is calculated by multiplying the number of a company’s shares outstanding by its stock price per share.
Mid Cap: A company with a market capitalization between $2 and $10 billion, which is calculated by multiplying the number of a company’s shares outstanding by its stock price.
Small Cap: Refers to stocks with a relatively small market capitalization, generally between $300 million and $2 billion.
Fixed Income: An investment that provides a return in the form of fixed periodic payments and the eventual return of principal at maturity. Unlike a variable-income security, where payments change based on some underlying measure such as short-term interest rates, the payments of a fixed-income security are known in advance. Read more
Absolute Return: The return that an asset achieves over a certain period of time. This measure looks at the appreciation or depreciation (expressed as a percentage) that an asset – usually a stock or a mutual fund – achieves over a given period of time. Read more
Unbundled: An unbundled plan offers the flexibility to select the best providers for each service component in an open architecture environment with fee transparency. A disadvantage has been managing the plan information and services across multiple relationships.
Growth of $1 Graph Source Information
- US Large Stocks – Standard & Poor’s 500 Total Return Index, US Small Stocks – Russell 2000 Index, US Corp Bonds – Markit iBoxx U.S. Investment Grade Liquid Index, US Govt Bonds – Barclays Capital U.S. 20+ Year Treasury Bond Index, T-Bills – Barclays 1-3 Month T-Bill Index, Inflation – CPI