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 Ashland Partners & Company, LLP.
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.