Calendar Year Returns

February 9, 2004 through June 30, 2019

EVO 2 Performance Disclosure 

The Evolutionary Market Timing System Discretionary Composite (EVO 2) has two decision making inputs: EVO 1’s mechanical trading system generates the foundational trading signals, which then are overlayed with traditional technical analysis and charting.  EVO 1’s composite is comprised of numerous long and intermediate-­‐term market timing systems (filters) and quantitative short-­‐term trading systems (triggers) that are integrated into one composite decision-­‐making system. Technical analysis involves the study of supply and demand through measurements of short interest and insider trading of stock, its momentum through moving averages and rate of change of the stock price, its regression to the mean and recognition cyclical information to determine what market trend will continue into the future. Charting focuses on the effect of previous price and volume movements through studying of graphs, charts and tables to predict future market movements.

 As of 2012, EVO 2 uses a leveraged S&P 500 index mutual fund as the primary investment for long positions in seeking to magnify the index’s exposure 150% on a daily basis to increase the potential return on investment. Prior to 2012, EVO 2 traded using the Rydex 2X S&P500 index fund (RYTNX). Allocations are made up to 100%. Conversely, leverage can magnify the losses of an investment during a down market. The fund’s use of derivatives, such as futures, options and swap agreements, may expose the fund’s shareholders to additional risks that they would not be subject to if they invested directly in the securities underlying those derivatives. The trading system also may employ an unleveraged inverse S&P 500 index mutual fund for short positions. Short positions have been made very infrequently. Given the potential risks involved, strategies employing leverage and shorting may not be suitable for conservative investors.

EVO 2 performance is based on the oldest actual Potomac Advisor’s account using the EVO 2 strategy and is considered representative of all Potomac Advisor accounts within the EVO 2 composite strategy since all accounts, with few exceptions, are traded in the same omnibus group account. Occasionally an account may have different results than the composite due to specific investor instructions, fund restrictions, when the account was opened, or when a new contribution was made to the account. Composite returns are precision dated, time-­‐weighted total returns, that reflect the reinvestment of dividends and capital gain distributions. Composite returns are net of the underlying mutual fund management fees, custodial fees and other fund (administrative) expenses.

The performance results shown here reflect the use of the Guggenheim Rydex Investor class funds traded directly through the fund. Results shown here are gross and do not include management fees charged by Potomac Advisors of 2.00% annually, the maximum fee charged by Potomac Advisors, prorated quarterly and billed in advance. Fees charged by Potomac Advisors or other investment advisors for this strategy may be higher or lower than the fees charged by Potomac Advisors and may be calculated in a different manner, thereby resulting in different performance than shown here. No adjustments have been made for potential income tax consequences. Performance for other investment programs may differ materially (more or less) from the performance shown here. It should not be assumed that future recommendations will be profitable or equal past performance. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted.

The benchmark returns of the S&P 500 are total returns and reflect the reinvestment of dividends. The S&P 500 Index is a capital weighted index composed of 500 widely held common stocks varying in composition, and is not available for direct investment. Benchmark returns are provided exclusively for comparison purposes only so as to provide general comparative information to assist an individual client or prospective client in determining whether the performance of the EVO 2 strategy meets, or continues to meet, his/her investment objective(s).

It should not be assumed that any of the programs will correspond directly to any such comparative index. The volatility of the market indices may materially differ (more or less) from that of the actual portfolios. Since individuals cannot invest directly into any index, deductions for management fees or other custodial or transaction charges are not taken into account. These charges, if applicable, would reduce the overall return of the S&P 500 index. The strategies shown here involve investing in mutual funds. Mutual fund shares are not insured by the FDIC or any other agency, are not guaranteed by any financial institution, are not obligations of any financial institution, and involve investment risk, including possible loss of principal.

The data presented has been collected from sources believed to be reliable; however, Potomac Advisors does not guarantee nor warrant the accuracy, timeliness, or completeness of the information. Past performance is no guarantee of future results. This material is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any security. Such offers can only be made where lawful under applicable law.

Potomac Advisors is registered as an investment adviser under Florida, Texas, and Maryland. Such registration does not imply a certain skill or training and no inference to the contrary should be made. Information pertaining to Potomac Advisor’s advisory operations, services, and fees is set forth in their current Form ADV Part II, a copy of which is available from Potomac Advisors upon request. Information pertaining to any mutual fund that is used in the EVO 2 strategy is set forth in each respective mutual fund’s prospectus, a copy of which is also available from Potomac Advisors upon request.

Year EVO 2 Gross EVO 2 Net 2.0% S&P 500
2019* 15.37% 14.22% 18.54%
2018 7.09% 4.96% -4.38%
2017 16.62% 14.30% 21.83%
2016 13.88% 11.62% 11.96%
2015 11.54% 9.33% 1.38%
2014 23.64% 21.19% 13.69%
2013 41.62% 38.81% 32.39%
2012 24.58% 22.10% 16.00%
2011 -5.17% -7.05% 2.11%
2010 -4.20% -6.10% 15.06%
2009 22.38% 19.95% 26.46%
2008 12.38% 10.15% -37.00%
2007 12.00% 9.77% 5.49%
2006 19.22% 16.85% 15.79%
2005 -6.35% -8.21% 4.91%
2004* 12.00% 9.47% 8.01%


For Individual Investors:

​The Fact Sheet and chart below show how a $100,000 investment in EVO 1 would have grown since inception on May 31, 2002 net of maximum fees. 
Performance reflects reinvestment of dividends and other earnings. Past performance does not guarantee future results.

Metric EVO 2 Gross EVO 2 Net 2.0% S&P 500
Annualized Rate of Return 13.47% 11.18% 8.57%
Cumulative Return 599%411% 254%
Standard Deviation (mo.) 4.47% 4.46% 3.66%
Loss Standard Deviation (mo.) -3.20% -3.11% -3.66%
Sortino Ratio (mo.), (Citi 3 mo.TB) 0.37 0.02 0.22
Maximum Drawdown -25.55% -25.92% -51.0%
Maximum Drawdown Recovery Period 19 months 27 months 37 months
Up Capture vs. Market 96.15% 89.30% 100%
Down Capture vs. Market 65.30% 69.66% 100%
Alpha vs. Market 8.17% 5.88% 0%
Beta vs. Market 0.47 0.48 1.00


Summary Statistics

February 9, 2004 through June 30, 2019

For Investment Professionals:

​Registered Investment Advisers who wish to license EVO signals for managing their clients’ accounts should view the gross performance pdf Fact Sheet, chart, and tables below. The Fact Sheet shows how a $100,000 investment in EVO 2 would have grown since inception on February 9, 2004.  The chart shows the widening gap of EVO 2 relative to the S&P 500 total return. The tables show the relative performance of EVO 1 to the S&P 500 total return on a yearly basis and various modern and post-modern portfolio metrics that advisers may find useful in analyzing EVO 2's risk and risk adjusted returns. These results are before any of the advisers' management fees, or marketing and distribution fees that may be charged by the class of funds other advisers may use. ​

​The gross performance results shown are intended to demonstrate to advisers and potential licensees of EVO the performance of the manager, not the performance after fees, which are set by the licensees, and may differ from fees set by Potomac Advisors for their clients.  When presented to potential retail investors, performance net of the adviser or Potomac’s maximum fees must be also presented. Potomac’s maximum annual advisory fee is 2% prorated quarterly and paid in advance each quarter.​