The National Association of Active Investment Managers (NAAIM) has issued a renewed call for competitors for its “Shark Tank” competition. Since 2013, this unique challenge has allowed NAAIM Members to gain exposure to new ideas employing active management strategies, possibly leading to new business relationships. Mike Posey, Theta’s Marketing Director has served on the NAAIM Shark Tank Committee since its inception and all past Shark Tank winners are currently being tracked by Theta. For Investment Managers who employ active strategies, competing in NAAIM’s Shark Tank competition provides exposure to a room full of Advisors, many of which are seeking viable sub-advisory relationships. It’s an opportunity to describe your investment approach to the markets in your own words and answer questions posed by a panel of seasoned professionals. The opportunity to present your active strategy to other Advisors representing literally billions of dollars of client assets doesn’t come around every day. The NAAIM Shark Tank could provide the exposure necessary to take your business to the next level. To learn more about the Shark Tank Competition and how to apply to compete in this year’s contest download the Shark Tank Rules and Application. For more information about the NAAIM organization, see the NAAIM website home page. We hope to see you at the upcoming NAAIM Conference!

Time is Running Out for NAAIM Early Registration The National Association of Active Investment Managers (NAAIM) urges both members and non-members to register for this year’s Uncommon Knowledge Conference to be held at the Westin Fort Lauderdale Beach Resort in Florida on May 1 – 4, 2016. Join NAAIM and Active Investment Managers from around the country for the best Peer-to-Peer networking in the business. Register today now for one of the best Active Investment Management conferences this year! The “Shark Tank” Returns Back by popular demand, NAAIM’s Uncommon Knowledge Conference will again feature its version of the Shark Tank, in which conference attendees share their strategies with Investment Advisors looking for third-party talent. Theta Research will again be attending as an Innovation Sponsor at this important industry conference. See below for more information about registration for the event, discounted lodging and membership in the NAAIM organization – we hope to see you there! National Association of Active Investment Managers Early Bird Registration Ends This Friday, April 1. Register Today to Get Your Best Discounts Location: Westin Fort Lauderdale Beach Resort, 321 N. Ft. Lauderdale Beach Blvd Fort Lauderdale, FL 33304 Hotel Registration: NAAIM Reservation Link or call 888-627-7108 and mention NAAIM to receive the group discount. Make those Hotel Reservations by April 7! Membership Information:

Log In to Join or Renew Online Now Individual Membership ($300) Includes: Conference Discounts Member-Only Online Community Member-Only Online Resource Library Educational Webinars and Regional Workshops The Best Peer-to-Peer Networking in the Industry Group Memberships also available Download the New Membership Application

Theta News – SEC Actions Highlight the Importance of Actual Performance At Theta Research, we stress the need for actual performance data rather than backtested or other hypothetical returns. A recent article by the law firm of K&L Gates, LLP, discusses some of the recent SEC enforcement actions brought as a result of improper performance advertising by advisers. Entitled, “Recent SEC Actions Highlight Adviser Responsibilities With Respect to Performance Advertising,” the article stresses the SEC’s views that: 1. Hypothetical or back-tested performance data should not be based on assumptions when actual historical data is available (emphasis added); 2. Investment advisers should maintain adequate backup for performance claims made in their advertisements, including claims based on information provided by third parties; 3. Disclosure that performance data is hypothetical or back-tested should be complete and prominently displayed with the performance data; and 4. The prohibition on past specific recommendations in advertising material contained in Section 206(4)-1(a)(5) of the Advisers Act, as modified by SEC guidance, continues to be an important investor protection tool the violation of which is subject to SEC enforcement. Learn more about Theta Research’s performance documentation and verification methodology.

Having spent most of my career in the insurance and investment industries, I have seen more than my fair share of reports, studies and analyses seeking to explain investments and investor behavior. Most are mind-numbing in their complexity and are rarely worth an investor’s time. That’s why I prefer to explain financial concepts in common-sense terms, using everyday analogies where possible. Most investors know a lot more about what goes on in the world around them than they do about the latest market analysis, so if we can explain financial concepts in terms they understand, then it might stick with them a while longer. This article will attempt to address why so many investors who lost money in 2008 (and some in 2002) still cling to passive investment portfolios. Here’s what I think.

I’m not much of a golfer, but the few times I have played taught me the need for a “mulligan.” According to my golfing buddies, a mulligan is essentially a do-over where your last shot doesn’t count against you. So how does this concept apply to investors who stubbornly hold on to passive investment strategies? Let me explain. I was recently talking to a neighbor and, knowing I’m in the investment business, she began discussing her own portfolio. She was bragging about how well her large wire house broker had been doing over the past few years and how pleased she was with his guidance. So I asked about how her broker managed risks and if she had lost money in 2008, during the height of the bear market. She admitted that she had lost money big-time in ‘08, but justified it saying that everyone did poorly during that period of time. In other words, her broker got a mulligan for poor performance during the financial crisis. As we all know, in 2008, almost every asset class not only lost money, but lost big. Between October 2007 and March of 2009, the S&P 500 Index lost more than 50% of its value. Since then, however, the Index has rebounded over 100% and reached new highs thanks to a large dose of easy money from the Federal Reserve Bank. The result? Investors remember the recent upward trend and give the market a mulligan for 2008. There’s only one big problem. As my friends soon found out about my skill on the links, a lousy golfer seldom needs just one mulligan. The same is true of passive investment strategies. For proof, you need look no further back than the first decade of the new millennium, in which the major stock indexes needed two mulligans in less than 10 years. Do you really think those will be all it needs going forward? I doubt it. That’s why it’s important for investors to compare where they are in relation to their investment goals, including mulligans, and where they should be to be on track with their original investment plan. Investors are often sidetracked by the financial media’s claims of “record highs” when all it really means is that they got back to breakeven. They should be paying more attention to risk management. By focusing on the progress of an investment plan that includes actively managed strategies to reduce the effects of bear markets, investors can more clearly see how detrimental these do-overs can be. After all, you won’t be able to get a mulligan if you miss retirement goals.