iQ All Assets ETF Model

GO ANYWHERE…AT ANY TIME!

Why limit yourself to just stocks and bonds?

The iQ All Assets ETF Model seeks capital appreciation by selecting positions in domestic & global equity, credit, commodity and interest rate markets.  The Model follows a data-driven “all asset” approach that combines technical analysis with index price momentum as applied to a diversified universe of ETFs.

PROCESS

  1. The starting universe is comprised of the following:

    1. Equities (Domestic, International, Super Sectors* and Style Boxes)

    2. Currencies & Commodities (US Dollar, Japanese Yen, Gold, broad Commodity Index)

    3. Bonds (Domestic & International, High Grade & High Yield)

    4. Short Stocks (inverse S&P 500 and MSCI EAFE)**

  2. Sort the starting universe by 7-month exponential price momentum and select the top 10

  3. Sort the remaining ETFs by their 2-year correlation to crude oil and select the bottom 5

  4. Reconstitute every seasonal quarter (Feb, May, Aug, and Nov)

The benefits of an all-assets approach

The "All-Assets approach" is an investment strategy that aims to build a well-diversified portfolio by investing in a wide variety of asset classes. This approach involves investing in multiple asset classes such as stocks, bonds, commodities, and real estate to spread risk and increase returns.

The all-assets approach's fundamental tenet is that various asset classes have varying risks and returns. Investors can create a portfolio that is less volatile and produces returns that are more consistent over time by combining various asset classes.

Some of the key benefits of the all-assets approach include:

1. Diversification: Investing across a range of asset classes helps spread risk and buffer your portfolio from the effects of market volatility.

2. Potential for higher returns: By investing in a range of assets with different risk profiles, you can potentially achieve higher returns than by investing in just one or two asset classes.

3. Long-term focus: The all-assets approach is typically a long-term investment strategy that focuses on building a diversified portfolio that can withstand market fluctuations and generate consistent returns over time.

4. Flexibility: This approach is highly customizable, and investors can adjust their asset allocation based on their risk tolerance, investment goals, and market conditions.

Overall, the all assets approach can be a valuable strategy for investors looking to build a diversified portfolio that can generate consistent returns over the long term.

Please be aware that all asset hedge strategies involve significant risks and may not be suitable for all investors. These strategies aim to mitigate risk and protect against potential losses, but they do not guarantee profits or prevent market fluctuations. The performance of asset hedge strategies can vary based on market conditions and economic factors. Investors should carefully consider their risk tolerance and financial objectives before adopting any asset hedge strategy.

*Super sectors are an idea introduced by Morningstar that represents the grouping of individual sectors by historical betas.  The three super sectors are Defensive, Sensitive, and Cyclical. The Defensive Super Sector includes industries that are relatively immune to economic cycles. These industries provide services that consumers require in both good and bad times, such as health care, consumer staples and utilities. In general, the stocks in these industries have betas of less than 1.  The Sensitive Super Sector includes industries that ebb and flow with the overall economy, but not severely so. Sensitive industries fall between the defensive and cyclical industries as they are not immune to a poor economy, but they also may not be as severely impacted by a poor economy as industries in the Cyclical Super Sector. In general, the stocks in these industries have betas that are close to 1 and include the Telecommunications, Energy, Industrial and Technology sectors.  The Cyclical Super Sector includes industries significantly impacted by economic shifts. When the economy is prosperous these industries tend to expand, and when the economy is in a downturn these industries tend to shrink. In general, the stocks in these industries have betas of greater than 1 and include the Basic Materials, Financial Services, and Consumer Services sectors.

**Leveraged and inverse ETFs typically are designed to achieve their stated performance objectives on a daily basis. Some investors might invest in these ETFs with the expectation that the ETFs may meet their stated daily performance objectives over the long term as well. Investors should be aware that performance of these ETFs over a period longer than one day can differ significantly from their stated daily performance objectives.