The Alternative Asset Strategy seeks risk-controlled, long-term capital appreciation, and provides downside protection by tactically allocating the portfolio across a range of alternative asset classes. The alternative asset strategy encompasses agricultural products, energy, metals and real estate. The metals sector may use a gold, silver or an industrial metal ETF and the energy sector may use an oil and/or natural gas ETF. The strategy not only provides diversification attributes but also provides protection from rising inflation.
The model will look at each asset class separately to determine the likelihood of significant loss. Because these asset classes are highly volatile, the portfolio can go defensive utilizing either a money market fund or ETFs representing U.S. Treasury instruments. As with the Tactical Fixed Income Strategy, a separate model is used to determine whether the Treasury position in the model will be an intermediate Treasury ETF or a money market fund/ETF.
With regards to the agriculture sector ETF, the implementation of a defensive posture, should the ETF be sold, is governed by the positioning of the U.S. Equity Sector Strategy. If the U.S. Equity Sector Strategy is fully invested (i.e. not defensive and holds no significant cash/treasuries/cash equivalents) and the agriculture ETF is sold, the proceeds from the sale are invested into an S&P 500 index ETF. However, if the U.S. Equity Sector Strategy is in a defensive mode or begins to build a defensive position, then the proceeds from the sale of the agriculture ETF would be invested in a U.S. intermediate Treasury ETF (default).
The Alternative Asset Strategy trades the next trading day after a signal is received. The minimum account size is $1,000,000.
Note: The agriculture cycle tends to be very long and can be turned “off” for extended periods of time.