This strategy’s goal is to reduce the exposure to broader market risks and the short-term effects of increased volatility. Based on quantitative analysis of fundamental factors, the strategy selects the strongest large, mid, and small capitalization stocks (filtered for liquidity) in each of up to ten (10) sectors such as consumer staples, healthcare, technology, industrials, and financials among others. The combination of factors has been back-tested to have a high probability of outperforming the large capitalization broad market on a risk-adjusted basis. It uses a timed hedge seeking to protect against extended bearish periods.
Based on technical and quantitative fundamental factors, the strategy will seek to hedge up to 100% of the core positions or partially move to cash. The methodology is not designed to always beat the broad equity market’s performance in absolute terms, but rather to outperform on a risk-adjusted basis by substantially reducing maximum drawdowns and the exposure to extended downtrends while seeking to generate returns by remaining on the correct side of market cycles more often than not. Selected position trades and portfolio rebalancing occur as often as weekly but on average positions are held longer.