Diversified Fund Accounts ("DFA")

Can't predict the future? Most of us cannot.

Picking investments and deciding when to buy and sell is a lot like predicting the future. If you are like most folks, you may be uncomfortable doing this with your serious (as in college or retirement) money. You may be equally uncomfortable relying on someone else to do this for you.

That is why CNB offers Diversified Fund Accounts as a compelling investment alternative.

"DFA" Principles and Beliefs

• Markets work. Capital markets do a good job of fairly pricing all available information and investor expectations about publicly traded securities.
• Diversification is key. Comprehensive, global asset allocation can neutralize the risks specific to individual securities.
  
• Risk and return are related. The compensation for taking on increased levels of risk is the potential to earn greater returns.
• Portfolio structure explains performance. The asset classes that comprise a portfolio and the risk levels of those asset classes are responsible for most of the variability of portfolio returns.

With Diversified Fund Accounts, the guesswork is taken out of the equation. CNB offers 6 highly-diversified portfolios covering the entire reward-risk spectrum. Each portfolio contains a standard, fixed, optimal, fully-diversified mix of components – domestic large, mid, small, and micro-cap stocks; domestic real estate; international and emerging markets stocks; and domestic and foreign bonds. Each of the components represents a stand-alone asset class supported by a single "index-like" or "passive" mutual fund.

No guesswork here. No buy/sell or timing decisions to make. The approach is fully consistent with Modern Portfolio Theory. Each investor is fully invested in the world capital markets. Stock components include some 16,000 companies. Annual account rebalancing keeps each portfolio true to its investment objective.