Tactical Rotation Strategies – Investment Process
Quantitative Investment Decisions goal is to outperform the given benchmark over a market cycle by providing investors the diversification that they need with the downside protection that they desire. Our strategies tend to provide a more asymmetric risk profile with reduced left tail risk, a feature absent from buy and hold portfolios.
Within each asset class, the investment is diversified by multiple sector ETFs. QID uses a sequence of quantitative models to generate a binary signal, “on” or “off”, for each sector within an asset class or strategy.
ETF’s provide investors built-in diversification of securities within each ETF to avoid company specific risk. The ETF selected per sector is based on a proprietary scoring system considering tracking error and cost efficiency.
Each asset class has a unique weighting scheme dependent on number of sectors “on” to determine if a sector is over, under or equal weight. If the number of “on” sectors falls below a certain threshold, the asset class strategy triggers a defensive posture.
The proprietary defensive model determines if the cash portion of the asset class/ strategy should be invested in a U.S. Treasury position or cash alternative.
Tactical Rotation Strategies Asset Allocation Models
The Global Equity portfolio allocates 60% to the U.S. equity strategy and 40% to the International Equity strategy. The portfolio inception date is April 2012. Performance is examined quarterly by ACA Compliance Group.
QID uses an asset allocation optimization process to determine the base allocation according to preset investor risk tolerance. The asset allocation can be customized by responding to a series of questions from our proprietary questionnaire.