The Tactical Alternative Investments 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 investment strategy encompasses agricultural products, energy, precious metals and real estate. The precious metals sector may use a gold and/or silver 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 portfolio, 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 Tactical U.S. Equity portfolio. If the U.S. equity portfolio 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 model 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 Tactical Alternative Investments portfolio trades the next trading day after a signal is received unless there has been a trade on the same position within “trade date plus 3 trading days” (T+3). The minimum account size is $100,000.
Note: The agriculture cycle tends to be very long and can be turned “off” for extended periods of time.