PortfolioBuilder Methodology

PortfolioBuilder is an investment strategy tool for the self-directed investor. As a self-directed investor you select the investment amount, investment style and asset allocation model that corresponds to your financial situation and investment goals. The asset allocation models were designed to help investors diversify their portfolios, using risk profiles ranging from very conservative to aggressive.

The asset allocation models used in PortfolioBuilder are developed by the Investment Committee of Capital One ShareBuilder Corporation, the parent company of Capital One Investing, LLC (ShareBuilder). Asset models are reviewed by the Investment Committee every quarter and changes may be made, as deemed appropriate, in response to market conditions and are made available to self-directed investors through PortfolioBuilder. Any changes to allocations made by the Committee will be reflected in newly established portfolios but will not change the allocations in those that have already been created.

The Investment Committee developed the asset allocation models by following the principles of Modern Portfolio Theory, asset allocation and diversification. Historical returns and the standard deviation of returns from various asset categories helped inform the allocation for each investing style. The asset allocation models approved by the Committee were designed to offer the investor a diversified asset allocation that aligns with the risk, reward and time horizon of the typical investor for each investing style. Past performance and historical returns are not indicative of future performance or returns. Modern Portfolio Theory, asset allocation and diversification alone or in concert do not guarantee a profit or protect against market losses.

The minimum portfolio investment is $200. A flat rate dollar commission applies to each portfolio purchase and remains the same, even when the investment amount increases. If you choose to rebalance your portfolio the regular online trade commission will apply to the purchase or sale of any individual securities.

ShareBuilder makes no assessment regarding the likelihood or probability that any proposed investment plan will in fact achieve a particular goal. We are unable to predict or forecast market fluctuations or other uncertainties that may affect the value of any investment.

PortfolioBuilder consists entirely of exchange-traded funds (ETFs). Unlike individual stocks, ETFs are not shares of a company, but rather are shares of a trust that holds baskets of different stocks. Using historical performance of stock indices as a basis, a portfolio comprised solely of ETFs may limit the portfolio’s exposure to the price fluctuations affecting individual stocks. However, ETFs do not offer protection from price volatility in the event of market declines. A tradeoff in relying solely on ETFs as a strategy to achieve greater portfolio diversification at lower costs may be the potential for lower returns in a strong market, compared to a portfolio with one or more well-chosen individual stocks. You must monitor the performance of your plan yourself and make any appropriate adjustments over time. Diversification does not guarantee a profit or protect against market losses. Dividends are not guaranteed, and not all ETFs include a dividend investment objective or strategy. Other exchange-traded products such as Exchange-Traded Notes (ETNs) may be included.

PortfolioBuilder lists ETFs by fund families. Each of the fund families listed offer an ETF in each of the asset classes associated with the various investment styles. ShareBuilder does not endorse any particular fund family and may remove any fund family that no longer offers an ETF in each asset class. The Investment Committee will review fund families annually and may add new fund families that offer ETFs in each asset class. It is in your sole discretion as a self-directed investor, to choose to invest in a portfolio from a single fund family or a mix of fund families and to understand the risks associated with that investment. This and other information is included in each fund’s prospectus, which should be read carefully before investing.

PortfolioBuilder uses a dollar-based investing method, which allows you to buy as many shares as you can, including partial shares, based on your investment amount. An ETF may be added or removed from the PortfolioBuilder tool based on whether it meets or continues to meet our dollar-based investing criteria which include: liquidity, market capitalization and average daily volume.

Other investments not available through PortfolioBuilder may have characteristics similar to or superior to those offered through this tool.