Investment Solutions

• A major factor is the client’s tolerance for a change in account value.

• Mark to market account value includes unrealized gains or losses.

• Another major factor is income needs today or in the future.

Advisory Fees are outlined in your Advisory Agreement. Exchange Traded Fund (ETFs) have embedded expenses that do not appear on your account statement.

OVLS ETF Embedded Expense*

• OVT- Short Term Bond: 0.85%

• OVB- Core Bond: 0.87%

• OVM- Muni Bond: 0.88%

• OVLH- Hedged Large Cap: 0.93%

• OVL- Large Cap: 0.87%

• OVF- Foreign Equity: 0.98%

• OVS- Small Cap: 0.88%

*As of 2/22/2024. Subject to change.

• The Overlay Value defines the maximum amount of options contracts to be traded and determines the associated fees and expenses.

• The inventory and due diligence process determines accredited investor status and the need or lack thereof for estate and other tax planning, while also setting limits for the Overlay account value.

• The Overlay Worksheet allows you to document and us to consider your total asset picture.

• There are the three major factors that establish thresholds for participation in this unique asset class.

  • Underlying markable securities

  • Cash on hand

  • Minimum account value

• Allowable Overlay Value will not exceed more than one times (1x) the value of a client’s marketable securities managed by Bison.

• Total options traded will seek to meet, but not exceed the Overlay Value.

• Options trades active at any one time will be influenced by many factors that drive price and volatility.

• Accredited status will provide for the use of margin where appropriate.

Overlay Advisory Fees: Bison will charge reduced Advisory Fees on unique asset classes like the options used in the Overlay.

Sub-Advisory Fees: Overlay fees are different than embedded expenses like your ETFs. This fee is paid to the sub-advisor, Liquid Strategies, and will be shown as a deduction on your custodial statement.

Basis of Calculation: Overlay Value is a fixed number, reviewed annually or as needed, resulting in a consistent fee amount.

• Since inception in 2013, the Overlay has produced income using a paired put strategy.

• Strategy refinements have added multiple option expirations per week, taking the composite from 52 to 156 available “at bats” per year, statistically benefiting the defined risk outcome and increasing predictability.

• The introduction of fractional index options resulted in the democratization of what was previously typically associated with the ultra-wealthy. Now investors can participate with as little as $100,000.

Favorable to Neutral Overlay Conditions:

• Positive, flat, or slightly negative price movement in the S&P 500 over a 1-2 week period benefits the Overlay.

• Consistent market volatility within a measured range is beneficial to the strategy.

Unfavorable Overlay Conditions:

• Sudden, sharp drops in price of the S&P 500 are challenging for the strategy.

• Q1 and Q4 0f 2018 saw sharp drops in price, with a period of historically low volatility in between, resulting in underperformance of the strategy for the year.

• 2022’s historically high volatility throughout the year also resulted in underperformance of the strategy for the year.

Bond Impacts

• When interest rates go up, bond prices go down and when interest rates go down, bond prices go up.

• In the short run, rising interest rates may negatively affect the value of a bond portfolio.

• Over the long run, rising interest rates can actually increase a bond portfolio’s overall return.

• This is because money from maturing bonds can be reinvested into new bonds with higher yields. (Source)

• If rates rise steadily over time, it could take a while for the increased income to offset the capital losses. (Source)

Stock Impacts

• Generally speaking, rising interest rates are not welcomed by stock investors.

• The reasoning is that if the cost of borrowing increases, then companies will not be as eager to take on the added financing costs to grow their businesses. This would likely result in lower revenues, which would affect profitability. (Source)

• Any impact on the stock market to a change in the interest rate changes is generally experienced immediately, while for the rest of the economy, it may take about a year to see any widespread impact. (Source)