Market Cycle MandatesInvesting with confidence.

Market Cycle Mandates The Market Cycle Mandates program designed by Orion Portfolio Solutions seeks to diversify portfolios using a three-mandate process. We utilize this process to help insulate clients from the unpredictability of market cycles.

Stock and bond market investments are historically one of the most powerful creators of investment wealth. However, variables such as geopolitical uncertainty and shifting central bank policies can contribute to the uncertainty of markets often resulting in investors taking an emotional response to managing their portfolios.

This lack of clarity drives investors to take more risk at market peaks and less risk at market bottoms. These reactions can undermine the investor’s long-term interests.

In a crowded field of potential investment options, Market Cycle Mandates offers investors a clear and defined process. The process was designed to let independent investment managers focus on the things outside of your control, while we focus on the things that are within your control, allowing you to invest with confidence, regardless of market conditions.

This information is for illustrative purposes only and is not representative of any strategy or account.

Cycle of Investor Emotions

Market cycle changes are unpredictable, yet inevitable. Market Cycle Mandates seeks to address this challenge by delivering clients a common sense approach to managing portfolios regardless of external market variables.

Market Cycle Mandates allows you to focus on things within your control by: • Setting clear expectations and replacing emotion with discipline

• Recognizing the biggest driver of return and risk

• Identifying dedicated investment strategies to properly diversify portfolios

History shows that the market typically moves in cycles. In the past 120 years, there have been five bull markets (light blue) and four bear markets (dark blue). Investment strategies that work in bull markets may not be effective in flat or bear markets.

Introducing Market Cycle Mandates

Logarithmic graph of the Dow Jones Industrial from 12/1896 to 12/2018.

Source: Graph based on Rydex | SGI using data from us.spindices.com

According to a 2010 award winning study, Roger Ibbotson and Associates identified cyclical market movement as the primary driver of investment returns.

Evolving from this research, Orion Portfolio Solutions has created a program of select strategies that have been individually categorized for their specific contribution to the market movement of your overall portfolio, resulting in three distinct mandates.

With answers to these three questions, we can help align portfolios to meet client expectations.

1. Global markets, though volatile, have historically been great engines of long-term wealth creation. Should a portion of your portfolio be exposed to the returns and volatility associated with these markets?

2. Would you expect a portion of your portfolio to be actively managed during periods of market volatility?

3. Should a portion of your portfolio be excluded from market movement during periods of market declines?

How does Market Cycle Mandates Work?

Research Emphasizes the Importance of Market Movement on the Variance of Portfolio Returns

3 Questions to Understand Expectations

Financial Analyst Journal, March/April 2010, Volume 66.The Equal Importance of Asset Allocation and Active Management. 2010 CFA Institute

Building Confidence based on Long-Term TrendsStrategists in this mandate are optimized and stay fully invested in all market conditions.

Key Characteristics:• Source of risk/return: Dependent on market direction,

less reliance on manager skill.

• Role in portfolio: Capture and fully participate in market returns; long term growth, effectively manage longevity and inflationary risks.

Mandate 1—

Beta

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

3/31/2012/31/19

12/31/1812/31/17

12/31/1612/31/15

12/31/1412/31/13

12/31/1212/31/11

12/31/1012/31/09

12/31/0812/31/07

12/31/0612/31/05

12/31/0412/31/03

12/31/0212/31/01

12/31/0012/31/99

Beta Market Movement12/1999 - 03/2020Growth of $10,000

MSCI World

This information is for illustrative purposes only and will not be representative of current or future portfolios. This information should not be considered investment advice. Performance information is provided for informational purposes only regarding the correlation of this mandate to the MSCI World. The holdings of investment strategies available at Orion Portfolio Solutions will vary from the holdings constituting the benchmark.

Beta is a measure of the volatility, or systematic risk of a security or a portfolio in comparison to the market as a whole.

Turning Frustration into OpportunityStrategists in this mandate are highly flexible and able to adjust for changing market conditions. Their active approach allows them to increase and decrease their exposure to Market Movement as their research dictates.

Key Characteristics:• Source of risk/return: Increasingly dependent on active

manager decisions; Variable market exposure.

• Role in portfolio: Moderate/Flexible allocation designed to actively manage risk while opportunistically allocating to attractive asset classes.

Mandate 2—

Active

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

3/31/2012/31/19

12/31/1812/31/17

12/31/1612/31/15

12/31/1412/31/13

12/31/1212/31/11

12/31/1012/31/09

12/31/0812/31/07

12/31/0612/31/05

12/31/0412/31/03

12/31/0212/31/01

12/31/0012/31/99

Active Market Movement12/1999 - 03/2020Growth of $10,000

MSCI WorldUS Fund Tactical Allocation

This information is for illustrative purposes only and will not be representative of current or future portfolios. This information should not be considered investment advice. Performance information is provided for informational purposes only regarding the correlation of the benchmark for this mandate, US Fund Tactical Allocation, to the MSCI World. The holdings of investment strategies available at Orion Portfolio Solutions will vary from the holdings constituting this benchmark

Managing Concern by Providing Consistency Strategists in this mandate are designed to disengage from market movement and provide new sources of potential return and risk. They tend to exhibit low correlation to the other mandates.

Key Characteristics:• Source of risk/return: Very active strategies that are heavily

reliant on manager skill; use wider spectrum of asset classes and approaches; very little dependence on market direction.

• Role in portfolio: Counterbalance to the Beta Mandate; focus on risk, then return, enhance diversification and protection; improve overall risk management of portfolio.

Mandate 3—

Diversifier

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

3/31/2012/31/19

12/31/1812/31/17

12/31/1612/31/15

12/31/1412/31/13

12/31/1212/31/11

12/31/1012/31/09

12/31/0812/31/07

12/31/0612/31/05

12/31/0412/31/03

12/31/0212/31/01

12/31/0012/31/99

Market Movement Diversifiers12/1999 - 03/2020Growth of $10,000

MSCI WorldUS Fund Market Neutral

This information is for illustrative purposes only and will not be representative of current or future portfolios. This information should not be considered investment advice. Performance information is provided for informational purposes only regarding the correlation of the benchmark for this mandate, US Fund Market Neutral, to the MSCI World. The holdings of investment strategies available at Orion Portfolio Solutions will vary from the holdings constituting this benchmark.

Portfolio Construction and Setting Expectations

Determining AllocationUtilizing the Market Cycle Mandates risk scoring system, we work with you to determine your propensity towards risk, encapsulating into a target risk score. The target risk score will serve as a guide during the construction of your portfolio and enable us to set expectations (i.e. a range of returns, on the upside and the downside). Setting proper expectations is fundamental to long term investment success.

Building portfolios with an eye towards market changes takes investors a step beyond simply looking at what performed well in the past. Diversifying by mandates provides you with greater investing confidence, regardless of what type of market cycle is coming next.

The final step in our process is to align designated portfolio strategies with each of the mandates. Strategies have been carefully selected for each mandate objective. Selected strategies are then implemented utilizing mutual funds and ETFs for your chosen model. We continually monitor the overall strategist selection process so we can set expectations and confidently develop customized portfolios.

Strategist Selection

Three-Mandate Portfolio in One AccountOur technology and reporting suite allows us to view and manage each mandate during different market cycles. Understanding the relationship between each mandate and the role each Strategist plays in the overall portfolio is critical to making disciplined investment decisions.

Reporting

Our platform allows us to:• Combine investment strategies across

three mandates in ONE account

• Simplify tax reporting (one 1099)

• Rebalance at the registration and mandate level

Our reporting suite allows you to:• View portfolio activity including account

balances, mandate allocation, and individual security allocation

• Review performance by mandate or at the household level

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Orion Portfolio Solutions, LLC (“OPS”) is an investment adviser registered with the Securities and Exchange Commission. This material is for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product. Opinions expressed are based on economic or market conditions at the time this material was written. Economies and markets fluctuate. Actual economic or market events may turn out differently than anticipated. Facts presented have been obtained from sources believed to be reliable. OPS, however, cannot guarantee the accuracy or completeness of such information, and certain information presented may have been condensed or summarized from its original source.

The performance information presented in certain charts and tables represents historical performance data. Morningstar US Fund Market Neutral Category: Morningstar considers a fund market-neutral if its equity beta is between negative 0.3 and 0.3. The goal of almost every market-neutral fund is to arbitrage market mispricing by betting on the convergence of spreads, or the difference between a long and a short position pair, as the long position increases in value and the short position declines in value. The short position serves to hedge market exposure (reduce the beta) from the long position, while profiting from market inefficiencies. As the potential total return from the spread is often just a few percentage points, market-neutral funds may use leverage to enhance returns (although most market-neutral mutual funds do not use leverage). Because market-neutral funds hedge out broad market risk, a cash-like benchmark (such as Treasury bills) is more appropriate than a stock or bond market index.

Morningstar US Tactical Allocation Category: Tactical Allocation portfolios seek to provide capital appreciation and income by actively shifting allocations across investments. These portfolios have material shifts across equity regions, and bond sectors on a frequent basis. To qualify for the tactical allocation category, the fund must have minimum exposures of 10% in bonds and 20% in equity. Next, the fund must historically demonstrate material shifts in sector or regional allocations either through a gradual shift over three years or through a series of material shifts on a quarterly basis. Within a three year period, typically the average quarterly changes between equity regions and bond sectors exceeds 15% or the difference between the maximum and minimum exposure to a single equity region or bond sector exceeds 50%

The MSCI World Index, which is part of The Modern Index Strategy, is a broad global equity index that represents large and mid-cap equity performance across 23 developed markets countries. It covers approximately 85% of the free float-adjusted market capitalization in each country. MSCI World Index does not offer exposure to emerging markets.

An index is an unmanaged group of stocks considered to be representative of different segments of the stock market in general. You cannot invest directly in an index

Performance information regarding the Morningstar US Fund Market Neutral Category and the Morningstar US Tactical Allocation Category is provided for informational purposes only regarding the correlation or non-correlation of such strategies to the MSCI World Index. The holdings of investment strategies available at OPS may vary widely from the holdings constituting the benchmarks. The information is not to be considered representative of historical or future performance of any investment strategy made available by OPS. In addition, performance results for clients that invest in strategies available at OPS may vary from the historical performance of the Morningstar US Fund Market Neutral Category and the Morningstar US Tactical Allocation Category due to market conditions and other factors, including investment cash flows, mutual fund allocations, frequency and precision of rebalancing, tax-management strategies, lower or higher Strategist Fees, Administrative Fees and Advisor Fees, varying custodian, brokerage and other administrative fees and/or the timing of fee deductions. As a result of these and potentially other variances, actual performance for client accounts may differ materially from (and may be lower than) that of the listed benchmarks. As with any investment strategy, there is potential for profit as well as the possibility of loss. OPS does not guarantee any minimum level of investment performance or success of any index portfolio or investment strategy. All investments involve risk and investment recommendations will not always be profitable. Past performance does not guarantee future results.

OPS Strategies are not sponsored, endorsed, sold or promoted by Morningstar, Inc. or any of its affiliates (all such entities, collectively, “Morningstar Entities”). The Morningstar Entities make no representation or warranty, express or implied, to the owners of the OPS Strategies or any member of the public regarding the advisability of investing in OPS Strategies generally or in the specific strategy presented here in particular or the ability of the OPS Strategies to track general market performance.

THE MORNINGSTAR ENTITIES DO NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE OPS STRATEGIES OR ANY DATA INCLUDED THEREIN AND MORNINGSTAR ENTITIES SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN.

Disclosure