The QID Tactical Fixed Income portfolio is a long only strategy that seeks risk-controlled, long term capital appreciation by investing in ETFs representing domestic and international fixed income. While the strategy focuses primarily on the U.S. debt markets, on an opportunistic basis, the portfolio will invest up to 20% of its assets in international and global fixed income asset categories.
The strategy provides downside protection by tactically allocating the portfolio across a variety of fixed income asset classes. The portfolio may include U.S. corporate, mortgage and municipal bonds, as well as Treasury Inflation Protected Securities (TIPS).
The allocations to the various fixed income asset classes are interdependent upon one another. The model will calculate the likelihood of significant loss associated with each asset class and generate either an “on” or “off” signal. Depending on which categories are “on” will determine if and how other fixed income categories are used in the portfolio.
As fixed income asset classes are signaled “off” (sold), the portfolio may build a defensive position equal to the allocation to the style that was sold. The default defensive position is an intermediate Treasury bond ETF. However, a separate algorithm is used to determine if a money market fund/ETF might be more appropriate. If all fixed income asset classes are “off”, the portfolio will become 100% defensive.
The Tactical Fixed Income 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: A municipal bond ETF is used as a diversifying asset class, and we believe it is appropriate for both taxable and tax-exempt accounts. International developed market and emerging market debt may be used opportunistically, over time. Allocation to each global or international category is limited to 10%.