Intelligent Fund Management with Ed Downs, February

March 15, 2016
Intelligent Fund Management
“Introduction: About the IFM Opportunity”
with Ed Downs, CEO Nirvana Systems, Inc.
This webinar is ONLY being provided to those who have a
prior relationship with Nirvana Systems and who are also
accredited investors.
This presentation is not intended to replace or alter
information in the offering documents. The Regulation D
Offering Memorandum is the only source of information
on which an investment decision should be made.
Please do not share this webinar with outside parties
without the express permission of Nirvana Systems.
Thank you.
Agenda
In this Webinar, we will explore ways we are building
Intelligent Fund Management, LLC. for success.
Topics:
• Target Markets
• Revenue & Exit Strategies
• Recent Success
• Q&A Session
Target Markets
Target Markets
The Robo Advisors have about
$7 Billion under Management.
The IRA + 401k space has over
$11 TRILLION in Assets Under
Management.
IRA + 401k
Investment AUM
are $11 Trillion+
The Robo
Advisors $7
Billion
Recent News
Automated Investment Management
Products for the IRA/401k Space
“Breaking new ground in retirement planning,
Betterment, one of the largest robo-advisers in the
industry, will begin offering 401(k) plans to employers.”
Jon Stein, CEO of Betterment said, "We think now is the
moment the country is calling to us … it is past time for
this to happen.“
Source: Investment News
http://www.investmentnews.com/article/20150911/FREE/150919985/be
tterment-to-become-first-major-robo-adviser-to-offer-401-k-plans
3 Ways to Win
Revenue / Exit Strategies
License to
IRA/401k
firms
IFM
Demonstrate Advantage
Acquisition
by Financial
Services Co.
Reg A+
“Mini IPO”
1) Cash Flow
Expanding the Revenue Model
Wealthfront has $3 Billion under management:
– Fee to manage is .5% of AUM.  Only Source
– Average size of account is $90,000
– 30,000 subscribers * $450 = $13.5 M per year.
Our Revenue model is based on 3 Components:
1. Subscription Revenue
2. Software Platform Revenue
3. Advanced Algorithm Up-Sells
Assumptions:
Simplest Version. No T.E., No A.A.
Higher-Performing Proprietary Algorithms
$5 to $300 /Month depends on AUM.
Multiple End-User sale @ $10/mo each.
Return on Investment
**
Multiple Revenue Components at Work...
• Web Site Subscriptions: $5-$100/mo
• Software Sales: Sale of the Application to users
to upload custom methods.
• Up-Sells of Advanced Algorithms
• RIA Subscriptions
** The published projection was understated for Year 1 because this cell was
showing Month 12 and not summing all the months of Year 1.
2 Units
Cost = $10,000
Based on this projection...
Year 1
$8,900
89%
Year 2
$33,700 337%
Year 3
$50,500 505%
2) Acquisition /Investment
Raises in the Space
Source:
CrunchBase.com
Acquisition Exit Strategy
Possible
Strategic Value
in the Future
$140.00
$120.00
$100.00
Negotiated
Investor
Buy-Out
$80.00
Series1
$60.00
$40.00
$20.00
$0.00
IFM
WealthFront
Betterment
Personal Cap
Leanvest
Future Adv
Sigfig
3) Mini IPO
The “Mini-IPO” Option
“Regulation A+: Final Rules
Offer Important Capital
Raising Alternatives”
“On March 25, 2015, the
Securities and Exchange
Commission voted
unanimously to adopt final
rules to implement the
rulemaking mandate of Title
IV of the JOBS Act by adopting
amendments to Reg A.
The new rules modernize the existing framework under Regulation A by, among other
things, requiring that disclosure documents be filed on EDGAR, allowing an issuer to make
a confidential submission with the SEC, permitting certain test-the-waters
communications....” *
* Source: http://www.mofo.com/~/media/Files/ClientAlert/2015/03/150326RegulationA.pdf
Regulation A+
Raise $20m to $50m
“Test the Waters”
No Restrictions!
IPO Exit Strategy
Value (Cap)
Comparison
assuming Pro
Forma holds.
$200.00
$180.00
$160.00
$140.00
$120.00
At the point
of IPO, a ratio
of Public to
Private
ownership
would be
negotiated.
Cap
$100.00
Rev
$80.00
Negotiated
Underwriter
Buy-Out (or
stock swap)
$60.00
$40.00
$20.00
$0.00
WealthFront
Millions
IFM
Recent Success
Our Approach
We use Technical
Indicators to determine
Market State.
Then, we select
prudent mixtures of
assets (ETFs) based on
measuring the
INTERNAL component
stocks, and other
methods.
A Comparison
The Results shown were arrived at by taking the ETF’s and allocation
determined by a well-known “Robo-advisor” portfolio.
ETF
VTI
VEA
VWO
VIG
XLE
MUB
Simulation
Description
US Stocks
Foreign Stocks
Emerging Markets
Dividend Stocks
Natural Resources
Municipal Bonds
Allocation
35%
17%
14%
6%
5%
23%
A Simple Improvement
We defined 2
Market States, NonVolatile and Volatile
using the SPY ETF.
We simply switched
to the different mix
when Market State
changed.
Non-Volatile Allocation Mix:
ETF
VTI
VEA
XLP
VIG
XRT
QQQ
Description
US Stocks
Foreign Stocks
Consumer Staples
Dividend Stocks
Retail Stocks
Tech Stocks
Allocation
35%
17%
14%
6%
5%
23%
Volatile “Defensive” Allocation Mix:
ETF
MUB
XLU
BNDX
IAU
Description
Municipal Bonds
Utility Stocks
International Bonds
Gold Stocks
Allocation
25%
15%
15%
15%
Kicking it Up a Notch
OmniFunds can switch
between any number of
ETFs, Dynamically.
Here OmniFunds selected 5
out of 10 ETFs based on
changes in Market State.
Average Result over 3
years: +18% per year
Now Deployed
Using the Elite Trader facility in OmniVest.
This Fund is currently available
to Director’s Club Members
through the Elite Trader facility
in OmniVest. *
* Trades passed from VT to OV.
Development News
Combining Methods
When Selecting
Inverses, use the
Strength of the
Inverses themselves
to select one or more
Inverses to trade.
When Selecting
Equity ETFs, Use
Internal Strength to
select one or more
Equity ETFs to Trade.
Q&A
Intelligent Fund Management
“Exit Strategy: Positioning IFM for Acquisition.”
with Ed Downs, CEO Nirvana Systems, Inc.
Robo Advisors
Automated Fund Management
In 2013-2014, the “Robo
Advisors” appeared on
the scene.
The Vehicle
Robo Advisors use ETFs almost exclusively to
allocate customer accounts to.
The Approach
Robo Advisors use
algorithms based
on Modern
Portfolio Theory
to allocate
resources across
ETFs in different
asset classes.
If one category
LOSES value, the
Robot Buys More.
The Marketing Pitch
Average Return: 6.7% per year.
Wealthfront
1. “Our portfolios do better than the Average Advisor.
The average advisor returns use data from the ARC Private Client indices which provide
real performance numbers delivered to discretionary private clients by participating
investment managers.”
2. “Our Fees are Low.”
3. “We provide Automatic Tax LOSS Harvesting.”
Average Advisor
Returns
How it’s worked out.
One of
Wealthfront’s
Portfolios
Performance
1/1/2015
through
10/1/2015 *
* Simulation without
re-balancing. These firms
say that re-balancing adds
0.6% to annual returns.
IBotson Published Record
IBotson provides
the Robo Advisor
system that is in
use by many firms.
Here is their
published record.
ETF: “SPY”
An investment
in SPY
from
Historical
“Back
ACTUAL
Test”
through
thePerformance
start of this graph
would
ofhave
the MPT
Q3 of
2015...
made 10% more
than
method, 1/1/2011
the best managed portfolio.
to 10/1/2015.
The OmniFunds Opportunity
What about OmniVest?
OmniFUNDS differs from OmniVEST in nearly all aspects.
Parameter:
Account Size
Trading Frequency
Draw Downs
Vehicles
Cost to End User
Return Potential
Hedging
Education
MPT
User Involvement
Mobile
Competitor
OmniVest
$25k +
Daily
Lower
Stocks and ETFs
$100 - $300 /mo + broker
10% - 50% per year
No
Intense
No similarity
Can be very high
No
Any automated trading system
OmniFunds
$5k +
Periodically (weekly, monthly)
Higher
ETFs Only
$10 - $100/ mo
7% - 20% per year
Yes
Simpler
70% similar story
Designed to be minimal
Yes
Robo-Advisors
Building OmniFunds
OmniFunds Prototype
OmniFunds already exists.
Our “Prototype” application is
based on a Module that runs in
VisualTrader.
Alpha 4 Released
OmniFunds Release
Alpha 4 is now available
in the OmniFunds
Thread within the
VisualTrader Forum.
Performance Improvements
Mean Strength, an included Demo
Application, shows performance
improvements over the recent market.
OmniFunds Dev Path
We are currently working on
the Stand Alone application
that will enable users to
create custom Methods and
ultimately upload them to the
OmniFunds web site.
We want to provide a 100%
customizable platform where
users can create the switching
algorithm they want, and
provide it to the community.
Goals for MyOmniFunds.com
• 100% User Configurable on
the Web Site + Mobile.
• Custom Methods can be
uploaded to the site to be
shared with the
community.
• Many investment strategies
supported, including
applying hedges and the
use of options on ETFs.
Marketing OmniFunds
OmniFunds
Web Site
We use the same
WordPress
template used by
Wealthfront and
Betterment so we
can appear like a
viable competitor.
Path to Sales & Acquisition
Registration on Crowd
Funding Sites & Ads
Revenue and
Exposure in the
Consumer
Market
Registration on
Investment Portals
Interest and
Exposure in the
Financial
Services Market
Reg “D” Offering
Regulation “D” Offering
Purpose: Raise seed
capital for IFM
Rule 506b exemption
Must be Accredited
$1m net worth or $200k/year income
Initial Cap: $5m
1,000 Class A Shares
(voting) authorized
200 Available
Min Investment: $10,000
Q&A
Intelligent Fund Management
with Ed Downs, CEO Nirvana Systems, Inc.