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Subject: Re: Hi gang... wow!!!  Date: 9/16/2013 7:26 PM  
Author: Rayvt  Number: 72895 of 77291  
then it's riskadjusted returns are its gross returns times 1drawdown. There are a bunch of standard ways that riskadjusted returns are calculated. Average return divided by MaxDD is not one of those ways. In fact, MaxDD is virtually useless because it is just a measure of the onetime worst case event. CalMar, StdDev, Sortino, Sharpe, Ulcer Index, Ulcer Performance Index  these are all common measures. Just eyeballing the 40 year balance on the IUL I ran, versus the 40 year balance on the spreadsheet... looks to me like the IUL finishes with more money. The spreadsheet uses actual historical data. I can't cutpaste from your pdf, but it says, "reflect a hypothetical rate at the average historical rates". I don't see anywhere where they state what the rate they used. So you cannot compare the two, since one uses real data and the other uses an average. How *did* you create that PDF? I can't cut/paste from it, which is rather annoying. [...sounds of typing, grumbling in the background...] YES! HA! WHO'S THE MAN! Got it! I checked the Illustration at 4 different dates 10 years apart, and every one computed as an annual gain of 8.8%. This illustration is garbage and arguably fraudulent. They don't show any years where the return is zero, nor any years where the return is 12%. Yet we know from the historical data that 25% of the annual returns are < 0% (and therefore would be floored at 0%) and 45% of the annual returns are > 12% (and therefore would be capped at 12%) In order to do a liketolike comparison, you'd have to compare their illustration with a S&P500 B&H spreadsheet with a fixed 10.8% annual return. Or 9.2% for a 60/40 asset allocation. Oh, hmmm, very interesting. My spreadsheet computes the CAGR for the IUL portfolio and it computes as [....drum roll ....] 7.0% to 8.5%, depending on the exact starting date. So it appears they not only bogusly used a constant annual gain, but they put a bit of thumb on the scale. 

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