Kinetic Financial allows you to manage your own portfolio by following one of our Model Portfolios. Kinetic Financial uses our own mutual fund recommendations to buy and sell positions in our Model Portfolios to maximize returns. The stellar performance of our Model Portfolios further reinforces to quality of our recommendations.

The Model Portfolios are structured to make them easy to follow for your personal portfolio.  We announce trade executions at least in a day in advance so you can follow our steps exactly.  Other folks may simply use the Kinetic Financial Model Portfolios as a guide for their personal portfolio gaining insights from our recommendation and executions on mutual funds.

Model Portfolio Assumptions
The following underlying rules and assumptions all to the Kinetic Financial Model Portfolios:

• No cash is moved into or out of the Model Portfolios
• Dividends and capital gains distributions are paid as cash
• Transaction fees are based on the brokerage firm Brown & Co.
• Cost basis is calculated on a first-in first-out (FIFO) basis.  For example, suppose we buy 100 shares of ESMCX at $1 per share and then, at a later date, buy 150 additional shares at $2 per share.  If we were to sell 150 shares, the cost basis would be calculated as $200 (100 shares at $1 each and 50 shares at $2 each).

Portfolio Sizes
The size of a portfolio is a major factor in deciding how the portfolio should be managed. In general, smaller portfolios should have a smaller number of mutual fund positions.  Larger portfolios should have a larger number of positions. 

Smaller portfolios usually have less flexibility than larger portfolios for two reasons: first, mutual funds typically impose minimum investment sizes; secondly, transaction fees for a small portfolio with too many positions can cause drag on performance.

Kinetic Financial’s Small Model Portfolio is designed for personal portfolios between $40K and $120K.  If you want to use the Kinetic Financial investment methodology for a personal portfolio less than $40K, we recommend you invest in a subset of the mutual funds contained in our Small Model Portfolio.  For smaller portfolios less than $40K, use your judgment to invest in mutual funds that keep your transaction fees and minimum investment within reasonable boundaries.

Kinetic Financial provides the following Model Portfolio sizes:

Small Model Portfolio - Managing portfolios between $40K and $120K
Medium Model Portfolio - Managing portfolios between $100K and $600K
Large Model Portfolio - Managing portfolios larger than $500K
IRA Model Portfolio - Managing tax deferred portfolios

Risk Profile
Kinetic Financial manages the model portfolios for moderate risk.  Our model portfolios take precautionary measures when the market trends downward by decreasing market exposure.  Similarly, our model portfolios take on additional risk during up markets by increasing market exposure.

The Kinetic Financial model portfolios are designed to manage 100% of your liquid assets with moderate risk.  Both of the co-founders use the Kinetic Financial methodology to manage 100% of their liquid assets.  We recommend you initially use the Kinetic Financial for a subset of your assets.  As your comfort and confidence level increases, you can increase the portion of your liquid assets that are managed using Kinetic Financial techniques and recommendations.


Model Portfolio Tips
The Model Portfolios are meant to guide you with your own investments.  If you’re just starting out, here are a few tips:

• Make new investments when the market is trending upward, or neutral at the very least.  Kinetic Financial provides insights on how the market is performing with the Market Commentary. This is especially important when you start following a pre-existing model portfolio.  The existing model portfolio positions should only be duplicated when the market is trending upwards or neutral.  In general, it’s better to ease rather than jump into the market.  Spread out your initial investment over a few weeks or a few months, depending on the portfolio size.  For instance, you may choose to invest 25% of your portfolio over 4 different time periods.  After the initial investment, wait until you have a 4% or 5% gain before investing an additional 25% of your portfolio.
• Only duplicate the Model Portfolio positions with a recommendation of “Accumulate,” “New Buy” and “Hold.”  
• Use the Model Portfolio to help guide your personal portfolio.  Start by analyzing what Kinetic Financial has recently bought.  Also look at our strong positions.  Gradually over time, you should strive to change the allocation of your portfolio to match our Model Portfolio.
• Your personal portfolio will never exactly match our Model Portfolio even if you duplicate our holdings exactly.  There are two reasons for this.  First, the holding period of your positions will differ from ours.  The holding period affects fees, penalties, and taxes which drive our buy and sell decisions (see Mutual Fund Fees for more information on mutual fund fees). Finally, the funds we’ve invested in may now be closed to new investors.  For these closed mutual funds, look at our list of alternative funds.
• Pay extra attention to “Sell” signals.  If your holding period is shorter than the Model Portfolio, see if you will incur penalties if you were to sell.  In this case, consider postponing the “Sell” signal to avoid penalties.  Also, for taxable accounts, consider delaying the “Sell” signal if you are close to a 12 month holding period for long term capital gains treatment.