Market Update with Chris Gauthier, CFA Presentation from Stonehearth Capital Management's Semi-Annual Breakfast Seminar held on May16, 2015 at the Danversport Yacht Club.

1. Stonehearth Capital
Management

2. SCM Portfolio Construction
• Investment Philosophy
• Asset Allocation
• Security Selection

3. Investment Philosophy
• Long Term Full Cycle Investors
• Manage Risk not Return
• Don’t Lose the Money
• Diversification

4. Asset Allocation
• 3 Risk Levels = 3 Portfolios
 Conservative
 Moderate
 Aggressive

5. 60/40 – Don’t Fix What Isn’t Broken
• 60% EQUITY
•45% US Equity
•15% INTL Equity
• 40% FIXED INCOME
Asset Allocation

6. Asset
Class
Moderate
Portfolio
Market
Portfolio
Relative
ALTERNATIVE 30% 0% +30%
US EQUITY 37% 45% - 8%
INTL EQUITY 20% 15% +5%
FIXED INCOME 13% 40% - 27%
Asset Allocation

7. Security Selection Alternative
• Absolute Return
• Expected Return is > Inflation (Net of All Fees)
• Long Term Investment Themes
• Help Reduce Drawdowns

8. Asset Class
Moderate
Portfolio
Market
Portfolio Relative
US EQUITY 37% 45% - 8%
Asset Allocation

9. Security Selection US Equity
• Factor Based (Please don’t call it smart beta)
• Expected Return is > US Equity
• Long Term Investment Themes
• Risk Management within the Portfolio

10. Asset
Class
Moderate
Portfolio
Market
Portfolio
Relative
INTL EQUITY 20% 15% +5%
Asset Allocation

11. Security Selection
International Equity
• Factor Based
• Expected Return is > Intl. Equity
• Long Term Investment Themes
• Risk Management within the Portfolio

12. Asset
Class
Moderate
Portfolio
Market
Portfolio
Relative
FIXED INCOME 13% 40% - 27%
Asset Allocation

13. Security Selection
Fixed Income
• Factor Based
• Expected Return is > Fixed Income
• Long Term Investment Themes
• Risk Management within the Portfolio

14. THANK YOU!
If you would like more information or have any
questions or concerns pertaining to this presentation,
please contact our office. We would be happy to speak
with you.
Stonehearth Capital Management
199 Rosewood Drive, Suite 200
Danvers, MA 01923
Phone: (978) 624-3000
Fax: (978) 624-3007
info@stonehearthcapital.com

15. The information presented here is not specific to any individual's personal
circumstances. To the extent that this material concerns tax matters, it is
not intended or written to be used, and cannot be used, by a taxpayer for
the purpose of avoiding penalties that may be imposed by law. Each
taxpayer should seek independent advice from a tax professional based on
his or her individual circumstances. These materials are provided for
general information and educational purposes based upon publicly
available information from sources believed to be reliable—we cannot
assure the accuracy or completeness of these materials. The information
in these materials may change at any time and without
notice. Stonehearth Capital Management, LLC is a Registered Investment
Advisor. Registration does not imply a certain level of skill or training.
Disclosure