and remain diversified - amg funds · keep calm and remain diversified | page a a short- and...

KEEP CALM AND REMAIN DIVERSIFIED | PAGE A

A Short- and Long-Term Review of the Power of Diversification

KEEP CALM

AND REMAIN

DIVERSIFIED

2Q 2019

| KEEP CALM AND REMAIN DIVERSIFIED KEEP CALM AND REMAIN DIVERSIFIED | PAGE 2

S&P 500® Index Total Return Through Market Cycles Since 1926

The Law of Market Cycles

Source: FactSet, S&P Dow Jones Indices as of June 30, 2019. The index is unmanaged, is not available for investment and does not incur expenses.Past performance is no guarantee of future results.

+193%3.7 yrs

-83%

+415%4.6 yrs

-50%

+65%1.4 yrs

-30%

+210%4.0 yrs

-22%

+936%15.0 yrs

-29%

+144%6.3 yrs

-43%

+76%2.4 yrs

-30%

+845%12.8 yrs -45%

+108%5.0 yrs

-51%

+817%12.7 yrs

-22%

+397%10.3 yrs

$1,000

$10,000

$100,000

$1,000,000

$10,000,000

$100,000,000

2019201120062001199619911986198119761971196619611956195119461941193619311926

$83,336,809

2016

Bull Markets:Average Increase: 382%Average Duration: 7.1 Years

Current Bull Market (2009-2019)

Increase: 397%Duration: 10.3 Years

Assessing your Risk Appetite

Low

Risk

Medium Risk

High Risk ?

Bear Markets:Average Decline: -41%Average Duration: 1.4 YearsFrequency: 7.3 Years

Bull Market Returns and DurationBear Market Returns


A Closer Look at Historical Bear Markets

-100

-80

-60

-40

-20

0

10% Decline = Correction

201920142010200620021998199419901986198219781974197019661962195819541950194619421938193619301926

20% Decline = Bear Market

7

1

9

8

6

3

2

45

10

Bear Market DetailsMarket Events Market Peak Bear Declines Duration (months)

1 Crash of 1929 - Started the Great Depression Sep 1929 -86% 342 1937 Fed Tightening - Premature policy tightening Mar 1937 -60% 613 Post WWII Crash - Post-war demand tapering May 1946 -30% 374 Flash Crash of 1962 - Flash crash, Cuban Missile Crisis/Cold War jitters Dec 1961 -28% 65 Tech Crash of 1970 - Economic overheating, civil unrest Nov 1968 -36% 186 Stagflation (High Inflation/Slow Growth) - OPEC oil embargo Jan 1973 -48% 217 Federal Reserve (Volcker) Tightening - Whip Inflation Now Nov 1980 -27% 218 1987 Crash - Program trading, overheating markets Aug 1987 -34% 39 Tech Bubble - Extreme valuations, .com boom/bust Mar 2000 -49% 3010 Global Financial Crisis - Housing bubble, Lehman collapse Oct 2007 -55% 17

Averages – -41% 17

Source: MSNBC, FactSet, and S&P Dow Jones Indices. The index is unmanaged, is not available for investment and does not incur expenses. Daily returns are shown for the S&P 500® Index. As of June 30, 2019.

Highlighted returns capture peak to trough corrections of 10% or more during the time period. Source: FactSet. As of June 30, 2019. 1 Source: The Conference Board. The Consumer Confidence Survey® reflects prevailing business conditions and likely developments for the months ahead. This monthly report details consumer attitudes and buying intentions, with data available by age, income, and region. Measurement dates: March 31, 2009, and September 25, 2018. Past performance is no guarantee of future results.

A Closer Look at the Current Bull Market

0

20

40

60

80

20192018201720162015201420132012201120102009

500

1000

1500

2000

2500

3000

20192018201720162015201420132012201120102009

VIX Average: 17.4

Jul 2, 2010-16.0%

Consumer Confidence Index: 261

Jul 2010Flash Crash, BP oil spill,Europe/Greece

Oct 3, 2011-19.4% Feb 11, 2016

-13.3%

Aug 25, 2015-12.4%

Feb 2018Wage growth and volatility trade unwind

Dec 24, 2018-19.8%

Oct 2011U.S. downgrade,Europe/periphery stress

Dec 2018Potential Central Bank

policy reversal

Aug 2015Global slowdown fears,China, Fed uncertainty

Feb 2016Oil, U.S. recession fears, China

Feb 8, 2018-10.2%

Consumer Confidence Index: 1381

S&P 500® Price Index (2009-2019)

Volatility VIX Index (2009-2019)


2017 21.8%2013 32.4%2009 26.5%2003 28.7%1999 21.0%1998 28.6%1997 33.4%1996 23.1%1995 37.4%1991 30.5%1989 31.5%1985 32.2%1983 22.5%1982 21.4%1980 32.4%1976 23.8%1975 37.2%1967 24.0%1963 22.8%1961 26.9%

2015 1.4% 2014 13.7% 1958 43.4%2011 2.1% 2012 16.0% 1955 31.6%2007 5.5% 2010 15.1% 1954 52.6%

2001 -11.9% 2005 4.9% 2006 15.8% 1951 24.0%2000 -9.1% 1994 1.3% 1988 16.8% 1950 31.7%1969 -8.5% 1992 7.7% 1986 18.5% 1945 36.4%1966 -10.1% 1987 5.2% 1979 18.4% 1943 25.9%1962 -8.7% 2018 -4.4% 1984 6.3% 1972 19.0% 1942 20.3%

2008 -37.0% 1957 -10.8% 1990 -3.2% 1978 6.6% 2016 12.0% 1971 14.3% 1938 31.1%2002 -22.1% 1946 -8.1% 1981 -4.9% 1970 4.0% 2004 10.9% 1965 12.5% 1936 33.9%1974 -26.5% 1941 -11.6% 1977 -7.2% 1960 0.5% 1993 10.0% 1964 16.5% 1935 47.7%1937 -35.0% 1940 -9.8% 1953 -1.0% 1956 6.6% 1968 11.1% 1952 18.4% 1933 54.0%1931 -43.3% 1932 -8.2% 1939 -0.4% 1948 5.5% 1959 12.0% 1949 18.8% 1928 43.6%1930 -24.9% 1973 -14.7% 1929 -8.4% 1934 -1.4% 1947 5.7% 1926 11.6% 1944 19.8% 1927 37.5%

Feast or Famine

less than

-20%

-20% to -12%

-12% to -8%

-8% to 0%

0% to 8%

8% to 12%

12% to 20%

more than

20%

less than

-20%

-20% to -12%

-12% to -8%

-8% to 0%

0% to 8%

8% to 12%

12% to 20%

more than

20%

less than

-20%

-20% to -12%

-12% to -8%

-8% to 0%

0% to 8%

8% to 12%

12% to 20%

more than

20%

less than

-20%

-20% to -12%

-12% to -8%

-8% to 0%

0% to 8%

8% to 12%

12% to 20%

more than

20%

less than

-20%

-20% to -12%

-12% to -8%

-8% to 0%

0% to 8%

8% to 12%

12% to 20%

more than

20%

less than

-20%

-20% to -12%

-12% to -8%

-8% to 0%

0% to 8%

8% to 12%

12% to 20%

more than

20%

less than

-20%

-20% to -12%

-12% to -8%

-8% to 0%

0% to 8%

8% to 12%

12% to 20%

more than

20%

Source: FactSet, S&P Dow Jones Indices. Data calculated from 1926-2018 using total return.Past performance is no guarantee of future results.

less than

-20%

-20% to -12%

-12% to -8%

-8% to 0%

0% to 8%

8% to 12%

12% to 20%

more than

20%

S&P 500 Index Stats Since 1926Total Years (1926-2018): 93Positive Years 68 yrs (73%)Negative Years 25 yrs (27%)# of Years Gains >20%: 34 yrs# of Years Losses <20%: 6 yrs

S&P 500® Average Annual Return: 10.0%The S&P 500® Index has grown at its average

annual rate in only 6 years since 1926

Remaining Invested Is Critical

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

201920182017201620152014201320122011201020092008200720062005200420032002200120001999

Missing even a few of the market’sbest days can dramatically impact returns.

Source: FactSet. As of June 30, 2019. Data date range is January 1999-June 2019.Past performance is no guarantee of future results.

S&P 500® missing 0 days

$3,537,869

S&P 500® missing

top 10 days $1,765,613

S&P 500® missing

top 25 days $898,139

Growth of $1,000,000 (1999-2019)


1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 YTD

US LC37.58

REITs37.05

US LC33.36

US LC28.58

EM66.41

REITs31.04

REITs12.35

IG Bond10.25

Intl SC57.57

REITs33.16

EM34.00

REITs35.97

EM39.42

IG Bond5.24

EM78.51

REITs28.07

Munis10.70

Intl SC18.52

US SC38.82

REITs32.00

REITs4.48

US SC21.31

EM 37.28

Muni1.28

US LC 18.54

US SC28.45

US LC22.96

US SC22.36

For Dev18.76

Intl SC32.65

Munis11.68

IG Bond8.44

Munis9.60

EM55.82

Intl SC29.30

Intl SC22.64

EM32.14

For Dev12.44

Munis-2.47

Intl SC62.91

US SC26.85

REITs9.37

EM18.22

US LC32.39

US LC13.69

Munis3.30

US HYB17.13

Intl SC 31.65

IG Bond0.01

US SC 16.98

Alts21.50

Alts21.10

REITs19.66

IG Bond8.69

Alts31.29

IG Bond11.63

US HYB5.28

REITs3.58

US SC47.25

EM25.55

For Dev14.47

Intl SC26.86

Intl SC10.76

Alts-19.03

US HYB58.21

Intl SC25.21

IG Bond7.84

REITs17.12

For Dev21.02

Munis9.05

Intl SC2.60

US LC11.96

For Dev 24.21

US HYB -2.08

REITs 16.67

Div Port 20.31

US SC16.49

Alts16.79

Div Port 8.63

For Dev27.93

Alts4.98

Munis5.13

US HYB-1.41

For Dev39.42

For Dev20.38

REITs13.82

For Dev25.71

Alts9.96

Div Port-23.08

For Dev33.67

EM18.88

US HYB4.98

For Dev16.41

Intl SC19.73

Div Port6.60

US LC1.38

EM11.19

US LC 21.83

REITs -4.22

For Dev 14.64

US HYB19.17

Div Port 12.12

Div Port 13.44

Munis6.48

US SC21.26

Div Port-0.31

Alts4.62

Alts-1.45

REITs36.18

US SC18.33

Alts9.30

US SC18.37

IG Bond6.97

US HYB-26.16

REITs28.46

US HYB15.12

US LC2.11

US SC16.35

Div Port13.47

IG Bond5.97

IG Bond0.55

Div Port7.82

US SC 14.65

US LC -4.38

Div Port 11.77

IG Bond18.47

US HYB11.35

US HYB12.76

Intl SC5.04

US LC21.04

US SC-3.02

US SC2.49

Div Port-5.05

US HYB28.97

Div Port12.98

Div Port7.91

US LC15.79

Div Port6.67

US SC-33.79

US SC27.17

US LC15.06

Div Port0.28

US LC16.00

Alts9.13

US SC4.89

Div Port-0.81

REITs6.68

Div Port14.03

Alts -4.49

Intl SC 11.60

Munis17.46

For Dev6.87

IG Bond9.65

Alts2.62

Div Port15.29

US HYB-5.86

Div Port-1.23

Intl SC-5.70

US LC28.68

US HYB11.13

US LC4.91

Div Port15.09

US LC5.49

US LC-37.00

US LC26.46

Div Port13.55

US SC-4.18

US HYB15.81

US HYB7.44

Alts2.98

Alts-1.12

Alts5.44

Alts 8.59

Div Port-5.50

EM 10.58

REITs12.24

EM6.03

Munis9.19

US HYB1.87

US HYB2.39

US LC-9.10

EM-2.60

EM-6.17

Div Port25.81

US LC10.88

US SC4.55

Alts12.89

Munis3.36

REITs-39.20

Div Port26.20

Alts10.25

Alts-5.25

Div Port11.88

REITs1.22

US HYB2.45

For Dev-3.04

Intl SC3.91

US HYB 7.50

US SC -11.01

US HYB 9.94

For Dev11.41

Munis4.43

For Dev2.27

US SC-2.55

IG Bond-0.82

For Dev-13.37

US LC-11.89

For Dev-15.80

Alts19.55

Alts9.03

Munis3.51

US HYB11.85

US HYB1.87

For Dev-43.56

Alts19.98

For Dev8.95

For Dev-12.21

Munis6.78

IG Bond-2.02

EM-2.19

US SC-4.41

For Dev2.75

Munis 5.45

For Dev-14.09

Alts 7.44

Intl SC0.21

IG Bond3.63

EM-11.59

REITs-17.01

Munis-2.06

Intl SC-18.06

Intl SC-14.62

US SC-20.48

Munis5.31

Munis4.48

US HYB2.74

Munis4.84

US SC-1.57

Intl SC-50.23

Munis12.91

IG Bond6.54

EM-18.42

Alts6.36

Munis-2.55

Intl SC-4.03

US HYB-4.47

IG Bond2.65

REITs 3.76

EM-14.57

IG Bond 6.11

EM-5.21

Intl SC2.18

Intl SC-18.66

EM-25.34

REITs-2.58

EM-30.61

For Dev-21.40

US LC-22.10

IG Bond4.10

IG Bond4.34

IG Bond2.43

IG Bond4.33

REITs-17.55

EM-53.33

IG Bond5.93

Munis2.38

Intl Sc-18.50

IG Bond4.21

EM-2.60

For Dev-4.32

EM-14.92

Munis0.25

IG Bond3.54

Intl SC-18.20

Munis 5.09

A Review of Asset Class Performance Over the Last 23+ Years

The performance shown is not indicative of the performance of any mutual fund or other investment product.As of June 30, 2019.

■ Diversified Portfolio

■ Alternatives (Alts) 5%

■Emerging Markets (EM) 5%

■Foreign Developed Equity (For Dev) 10%

■International Small Cap (Intl SC) 5%

■Investment Grade Bonds (IG Bonds) 30%

■ Municipals (Munis) 5%

■U.S. High Yield Bonds (US HYB) 5%

■U.S. Real Estate (REITs) 5%

■U.S. Large Cap Equity (US LC) 20%

■U.S. Small Cap Equity (US SC) 10%

Source: Barclays, Bloomberg, Dow Jones, FactSet, MSCI Russell, Standard & Poor’s as of June 30, 2019. See back cover for representative indices.

Past performance is no guarantee of future results.The indices are unmanaged, are not available for investment and do not incur expenses.


Think Beyond the S&P 500® Index

The diversified portfolio is rebalanced to the original allocation annually.See back cover for representative indices. Past performance is no guarantee of future results. As of June 30, 2019.

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 YTDIG Bond10.3%Munis9.6%

REITs12.4%

REITs3.6%

REITs31.0%

IG Bond8.4%

US HYB-1.4%

REITs33.2%

Munis11.7%

US HYB5.3%

Alts-1.5%

Intl SC57.6%

Intl SC29.3%

EM34.0%

EM39.4%

IG Bond5.2%

EM78.5%

EM66.4%

IG Bond11.6%

Munis5.1%

Div Port-5.1%

EM55.8%

EM25.6%

Intl SC22.6%

REITs36.0%

For Dev12.4%

Munis-2.5%

Intl SC62.9%

REITs28.1%

Intl SC18.5%

Intl SC32.7%

Alts5.0%

Alts4.6%

Intl SC-5.7%

US SC47.3%

For Dev20.4%

For Dev14.5%

EM32.1%

Intl SC10.8%

Alts-19.0%

US HYB58.2%

US SC26.9%

Munis10.7%

EM18.2%

Muni1.3%

Alts31.3%

Div Port-0.3%

US SC2.5%

EM-6.2%

For Dev39.4%

US SC18.3%

REITs13.8%

Intl SC26.9%

Alts10.0%

Div Port-23.1%

For Dev33.7%

Intl SC25.2%

REITs9.4%

REITs17.1%

REITs4.5%

EM 37.3%

IG Bond0.0%

For Dev27.9%

US SC-3.0%

Div Port-1.2%

For Dev-15.8%

REITs36.2%

Div Port13.0%

Alts9.3%

For Dev25.7%

IG Bond7.0%

US HYB-26.2%

REITs28.5%

EM18.9%

IG Bond7.8%

For Dev16.4%

Munis3.3%

US SC21.3%

Intl SC 31.7%

US HYB-2.1%

REITs37.1%

US SC21.3%

US HYB-5.9%

EM-2.6%

US SC-20.5%

US HYB29.0%

US HYB11.1%

Div Port7.9%

US SC18.4%

Div Port6.7%

US SC-33.8%

US SC27.2%

US HYB15.1%

US HYB5.0%

US SC16.4%

US SC38.8%

REITs32.0%

Intl SC2.6%

US HYB17.1%

For Dev 24.2%

REITs-4.2%

US LC37.6%

US LC23.0%

US LC33.4%

US LC28.6%

US LC21.0%

US LC-9.1%

US LC-11.9%

US LC-22.1%

US LC28.7%

US LC10.9%

US LC4.9%

US LC15.8%

US LC5.5%

US LC-37.0%

US LC26.5%

US LC15.1%

US LC2.1%

US LC16.0%

US LC32.4%

US LC13.7%

US LC1.4%

US LC12.0%

US LC 21.8%

US LC-4.4%

US LC 18.5%

US SC28.5%

Alts21.1%

US SC22.4%

For Dev18.8%

Div Port15.3%

For Dev-13.4%

Intl SC-14.6%

Div Port25.8%

Alts9.0%

US SC4.6%

Div Port15.1%

Munis3.4%

REITs-39.2%

Div Port26.2%

Div Port13.6%

Div Port0.3%

US HYB15.8%

For Dev21.0%

Munis9.1%

IG Bond0.6%

EM11.2%

US SC 14.7%

Alts-4.5%

US SC 17.0%

Alts21.5%

US SC16.5%

REITs19.7%

IG Bond8.7%

US HYB2.4%

Intl SC-18.1%

For Dev-21.4%

Alts19.6%

Munis4.5%

Munis3.5%

Alts12.9%

US HYB1.9%

For Dev-43.6%

Alts20.0%

Alts10.3%

US SC-4.2%

Div Port11.9%

Intl SC19.7%

Div Port6.6%

Div Port-0.8%

Div Port7.8%

Div Port 14.0%

Div Port -5.5%

REITs 16.7%

Div Port 20.3%

Div Port 12.1%

Alts16.8%

Div Port 8.6%

IG Bond-0.8%

EM-30.6%

Munis5.3%

IG Bond4.3%

US HYB2.7%

US HYB11.9%

US SC-1.6%

Intl SC-50.2%

Munis12.9%

For Dev9.0%

Alts-5.3%

Munis6.8%

Div Port13.5%

IG Bond6.0%

Alts-1.1%

REITs6.7%

Alts 8.7%

US SC-11.0%

For Dev 14.6%

US HYB19.2%

US HYB11.4%

Div Port 13.4%

Munis6.5%

Munis-2.1%

IG Bond4.1%

IG Bond2.4%

Munis4.8%

REITs-17.6%

EM-53.3%

IG Bond5.9%

IG Bond6.5%

For Dev-12.2%

Alts6.4%

Alts9.1%

US SC4.9%

For Dev-3.0%

Alts5.4%

US HYB 7.5%

For Dev-14.1%

Div Port 11.8%

IG Bond18.5%

For Dev6.9%

US HYB12.8%

Intl SC5.0%

REITs-2.6%

IG Bond4.3%

Munis2.4%

EM-18.4%

IG Bond4.2%

US HYB7.4%

Alts3.0%

US SC-4.4%

Intl SC3.9%

Munis 5.5%

EM -14.6%

Intl SC 11.6%

Munis17.5%

EM6.0%

IG Bond9.7%

Alts2.6%

Intl SC-18.5%

REITs1.2%

US HYB2.5%

US HYB-4.5%

For Dev2.8%

REITs 3.8%

Intl SC-18.2%

EM 10.6%

REITs12.2%

Munis4.4%

Munis9.2%

US HYB1.9%

IG Bond-2.0%

EM-2.2%

EM-14.9%

IG Bond2.7%

IG Bond3.5%

US HYB 9.9%

For Dev11.4%

IG Bond3.6%

For Dev2.3%

US SC-2.6%

Munis-2.6%

Intl SC-4.0%

Munis0.2%

Alts 7.4%

Intl SC0.2%

Intl SC2.2%

EM-11.6%

REITs-17.0%

EM-2.6%

For Dev-4.3%

IG Bond 6.1%

EM-5.2%

Intl SC-18.7&

EM-25.3%

Munis 5.1%

A Diversified Portfolio has Historically Smoothed Out the Ride Over the Long Term without Sacrificing Returns


S&P 500® Calendar Year Total Returns (%) (1999-2018)

Defining Volatility for Clients:

Source: FactSet, S&P Dow Jones Indices. The index is unmanaged, is not available for investment and does not incur expenses. Data calculated from 1999-2018 using total return.Past performance is no guarantee of future results.

-50

-40

-30

-20

-10

0

10

20

30

40

50

60

70

22.7

14.8

21.5 21.1

40.9

14.9 13.317.8 15.1

21.6

69.7

24.4

17.1 18.4

32.4

22.4

13.4

26.522.5

15.0

-11.8-16.6

-29.1-33.0

-13.8-7.4 -7.0 -7.5 -9.9

-47.7

-27.2

-15.6-18.6

-9.6-5.6 -7.3

-12.0 -10.3

-2.6

-19.4

21.0

-9.1-11.9

-22.1

28.7

10.94.9

15.8

5.5

-37.0

26.5

15.1

2.1

16.0

32.4

13.7

1.412.0

21.8

-4.4

20182017201620152014201320122011201020092008200720062005200420032002200120001999

Intra-Year Index Increases Intra-Year Index DeclinesCalendar Year Returns

∑ ( X - X )2

n - 1Diversified Portfolio Calendar Year Total Returns (%) (1999-2018)

-30

-20

-10

0

10

20

30

40

50

10.9 9.4 9.9 8.6

29.2

14.710.0

14.4

8.912.3

46.6

16.6

9.312.1

14.810.1

5.7

15.213.2

6.9

-6.5 -5.8

-12.7 -14.0

-5.9 -6.4-3.8

-6.0 -5.8

-30.6

-17.0

-8.2-11.3

-5.9 -5.9 -4.2-7.3 -6.1

-1.5

-10.9

8.9

3.5 -1.6

-5.4

24.2

12.3

6.3

14.1

4.7

-21.5

23.4

13.3

1.8

11.814.8

7.50.0

7.8

13.1

-4.9

20182017201620152014201320122011201020092008200720062005200420032002200120001999

Diversified Portfolio Allocation: Investment Grade Bonds (IG Bonds): 32%, Municipals (Munis): 5%, U.S. High Yield Bonds (US HYB): 5%, U.S. Large Cap Equity: (US LC): 23%, U.S. Small Cap Equity (US SC): 10%, Foreign Developed Equity (For Dev): 10%, International Small Cap (Intl SC): 5%, Emerging Markets (EM): 5%, U.S. Real Estate (REITs): 5%. Alternatives is 5% of this allocation in every other representation of the diversified portfolio in this brochure. However, daily data is not available for the HFRI Index, so it is omitted from this chart only.

Intra-Year Index Increases Intra-Year Index DeclinesCalendar Year Returns

AveragesReturns 5.6%Intra-Year Gain 23.3%Intra-Year Decline -15.6%

AveragesReturns 6.2%Intra-Year Gain 14.0%Intra-Year Decline -8.8%


Diversified Portfolio and S&P 500® Index Returns

Source: Barclays, FactSet, Standard & Poor’s. As of June 30,2019. Data date range is January 1999-June 2019. Past performance is no guarantee of future results.Bear Market defined as peak-to-trough decline of at least 20 percent.

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

201920182017201620152014201320122011201020092008200720062005200420032002200120001999

$3.54M

$3.91M

BEAR MARKET

BEAR MARKET

S&P 500® IndexDiversified Portfolio

Summary (1999-2019)

Diversified Portfolio

S&P 500® Index

Return 6.88 6.36

Standard Deviation 8.95 14.55

Max Drawdown -33.78% -50.95%

Bear Drawdown (Nov 2007-Feb 2009)

Months to recover

Diversified Portfolio -33.78% 19

S&P 500® Index -50.95% 37

Bear Drawdown(Mar 2000-Sep 2002)

Months to recover

Diversified Portfolio -13.72% 10

S&P 500® Index -44.73% 49

The Power of Diversification20-Year Returns and Standard Deviation (1999-2019)

Source: FactSet, S&P Dow Jones Indices. As of June 30,2019. Data date range is January 1999-June 2019. See back cover for representative indices. Past performance is no guarantee of future results. Standard Deviation (Std. Dev.): A measure of risk; it calculates the variability of returns by comparing the Fund’s return in each period with the average Fund return across all periods.

A Diversified Portfolio Offers Better Performance and a Smoother Ride

Retur

ns

Standard Deviation0 5 10 15 20 25

2%

4%

6%

8%

10%

U.S. Large Cap EquityReturn: 6.36

Std. Dev.: 14.55

Diversified Portfolio

Return: 6.88Std. Dev.: 8.95

Alts

REITs

Emerging Markets

ForeignDeveloped

InternationalSmall Cap

U.S. Small Cap Equity

MunisInvestment Grade Bonds

HighYield


Diversified Portfolio vs. S&P 500 Index Since 1990 (%)

Source: Barclays, Bloomberg, Dow Jones, FactSet, MSCI Russell, Standard & Poor’s as of June 30, 2019. See back cover for representative indices.

* Returns are not available for the MSCI ACWI ex USA SC from January 1990 to June 1994, so that index was removed from the Diversified Portfolio for the 1990s and 30 year total return periods. The weight was reallocated to MSCI World ex US.

Three decades of market cycles

-5

0

5

10

15

20

11.61

5.51

7.48 8.05

18.21

-0.95

13.08

9.75

1990-2019 (YTD)*2010-20192000-20091990-1999*

S&P 500® Diversified Portfolio

The Importance of a Long-Term Perspective

1-year rolling 3-year rolling 5-year rolling 10-year rolling 20-year rolling-30

-20

-10

0

10

20

30

40

19.75

12.4613.86

8.867.97

34.70

30.24

23.80

14.70

8.91

-12.70

3.38

-0.94

4.556.68

-26.21

-11.20

-2.37 -2.22

5.90

Source: FactSet. As of June 30, 2019. Performance represents a rolling 1-, 3-, 5-, 10-, and 20-year window with a 1-year moving step.Past performance is no guarantee of future results.

Diversified Portfolio Allocation: Investment Grade Bonds (IG Bonds): 30%, Municipals (Munis): 5%, U.S. High Yield Bonds (US HYB): 5%, U.S. Large Cap Equity: (US LC): 20%, U.S. Small Cap Equity (US SC): 10%, Foreign Developed Equity (For Dev): 10%, International Small Cap (Intl SC): 5%, Emerging Markets (EM): 5%, U.S. Real Estate (REITs): 5%, and Alternatives (Alts): 5%.

Maximum and Minimum Annual Total Returns (%)

20-year Annual Avg. Total Return

Growth of $1 Mil over

20 Years

S&P 500® 5.90 $3,148,073 Diversified Portfolio 6.68 $3,643,619


Description Allocation in Diversified Portfolio 1 Year 3 Year 5 Year 7 Year 10 Year 15 Year 20 Year 20 Year Annualized

Standard Deviation

Diversified Portfolio — -5.51% 5.12% 4.20% 6.55% 8.40% 6.52% 6.46% 8.91%

Alternatives (HFRI Fund Weighted Composite - USD) 5%* -4.65% 2.97% 2.14% 3.71% 4.92% 4.51% 6.14% 6.31%

Emerging Markets Equity (MSCI Emerging Markets) 5% -14.57% 9.25% 1.65% 3.23% 8.02% 7.90% 8.53% 21.77%

Foreign Developed Equity (MSCI World ex USA - Net Return) 10% -14.09% 3.11% 0.34% 5.27% 6.24% 4.78% 3.68% 16.27%

International Small Cap Equity (MSCI AC World ex USA Small Cap - Net Return) 5% -18.20% 3.82% 1.96% 6.59% 10.02% 7.31% 7.14% 17.69%

Investment Grade Bond (Bloomberg Barclays US Aggregate) 30% 0.01% 2.06% 2.52% 2.10% 3.48% 3.87% 4.55% 3.37%

Municipal Bond (Bloomberg Barclays Municipal Bond) 5% 1.28% 2.30% 3.82% 3.30% 4.85% 4.13% 4.55% 4.11%

REITs (Dow Jones US Select REIT) 5% -4.22% 1.97% 7.89% 8.17% 12.05% 8.11% 9.83% 21.16%

US High Yield Bond (Bloomberg Barclays US Aggregate Credit - Corporate - High Yield - 1983)

5% -2.08% 7.23% 3.83% 5.98% 11.12% 7.00% 6.55% 9.02%

US Large Cap Equity (S&P 500 - Total Return) 20% -4.38% 9.26% 8.49% 12.70% 13.12% 7.77% 5.62% 14.44%

US Small Cap Equity (Russell 2000 - Total Return) 10% -11.01% 7.36% 4.41% 10.44% 11.97% 7.50% 7.40% 19.38%

Table of Returns (as of 12/31/2018)

Source: FactSet as of December 31, 2018. Past performance is no guarantee of future results.

The indices are unmanaged, are not available for investment and do not incur expenses.The performance shown is not indicative of the performance of any mutual fund or other investment product.

More than 100 actively managed products covering

the risk spectrum for investors searching beyond the index

Why AMG Funds

Unrivaled access to insights of over 30 independent and

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The largest network of institutional quality boutique

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*5% Alternatives allocation not included in the diversified portfolio representation on page 12.

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IMPORTANT INFORMATION Diversification does not guarantee a profit or protect against a loss in declining markets. Investments in debt securities are subject to credit and interest rate risk. An increase in interest rates typically causes the value of bonds and other fixed income securities to fall. High-yield bonds (also known as “junk bonds”) are subject to additional risks such as the risk of default. Factors unique to the municipal bond market may negatively affect the value in municipal bonds.Investments in international securities are subject to certain risks of overseas investing including currency fluctuations and changes in political and economic conditions, which could result in significant market fluctuations. These risks are magnified in emerging markets.Investments in small-capitalization companies are subject to greater price volatility, lower trading volume and less liquidity than investing in larger, more established companies.Real estate investments are subject to factors such as changing general and local economic, financial, competitive and environmental conditions.Alternative investments are speculative, subject to high return volatility and involve a high degree of risk including, but not limited to, the risks associated with leverage, derivative instruments such as options and futures, distressed securities, may be illiquid on a long-term basis and short sales. There can be no assurance that these types of strategies will achieve their objectives or avoid substantial losses. Alternative investments may also be subject to significant fees and expenses.Investments in emerging markets are subject to risks such as erratic earnings patterns, economic and political instability, changing exchange controls, limitations on repatriation of foreign capital and changes in local governmental attitudes toward private investment, possibly leading to nationalization or confiscation of investor assets.The Bloomberg Barclays U.S. Corporate High Yield Bond Index (Representing U.S. High Yield Bonds) is a total return performance benchmark for fixed income securities having a maximum quality rating of Ba1 (as determined by Moody’s Investors Service). Bloomberg Barclays U.S. Aggregate Bond Index (representing Investment Grade Bonds): The Bloomberg Barclays U.S. Aggregate Bond Index is an index of the U.S. investment-grade fixed-rate bond market, including both government and corporate bonds.The Bloomberg Barclays U.S. Municipal Bond Index (representing Muni Bonds) is a broad-based benchmark that mea sures the investment grade, U.S. Dollar-denominated, fixed tax exempt bond market. The index includes state and local general obligation, revenue, insured, and pre-refunded bonds.

The HFRI Fund Weighted Composite Index (representing Alternatives) is a global, equal-weighted index of over 2,000 single-manager funds that report to HFR Database. Constituent funds report monthly net of all fees performance in U.S. Dollars and have a minimum of $50 million under management or a twelve (12) month track record of active performance. The HFRI Fund Weighted Composite Index does not include funds of hedge funds.MSCI World Index Ex USA (representing Foreign Developed Equity): The MSCI World ex USA Index captures large and mid cap representation across 22 of 23 developed markets countries—excluding the United States. With 1,021 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.The MSCI Emerging Markets Index (representing Emerging Markets) is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. Please go to msci.com for the most current list of countries represented by the index. The MSCI ACWI ex-USA Small Cap Index (representing International Small Cap) is a free float-adjusted market capitalization weighted index that is designed to measure the small capitalization equity market performance of certain developed (excluding the U.S.) and emerging markets. Please go to msci.com for the most current list of countries represented by the index. The Russell 2000® Index (representing U.S. Small Cap Equity) measures the performance of approximately 2,000 small-cap companies in the Russell 3000 Index, which is made up of 3,000 of the biggest U.S. stocks. The Russell 2000 serves as a benchmark for small-cap stocks in the United States. Please go to msci.com for the most current list of countries represented by the index.The Dow Jones U.S. Select REIT Index (representing U.S. Real Estate) tracks the performance of publicly traded real estate investment trusts (REITs) and REIT-like securities and is designed to serve as a proxy for direct real estate investment, in part by excluding companies whose performance may be driven by factors other than the value of real estate. The S&P 500® Index (representing U.S. Large Cap Equity) is a capitalization-weighted index of 500 stocks. The S&P 500® Index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The S&P 500® Index is proprietary data of Standard & Poor’s, a division of McGraw-Hill Companies, Inc. All rights reserved. The indices are unmanaged, are not available for investment and do not incur expenses.AMG Distributors, Inc., a member of FINRA/SIPC.

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