iQ Bat out of Hell (BoH) Model
Investment Objective
The iQ Bat out of Hell (BoH) Model is built around a straightforward but powerful idea: at any given point in the market cycle, some sectors are doing the heavy lifting and others are not. Rather than spreading exposure evenly across the market and hoping for the best, this strategy identifies which sectors have genuine momentum behind them and then selects only the steadiest performers within that group. The result is a concentrated 15-stock portfolio drawn from 3 sectors, updated every month to reflect where the market's strength actually sits.
Investment Process
The iQ Bat out of Hell (BoH) Model begins each month with a starting universe of 12 sector and industry strategies — Staples, Materials, Healthcare, Financials, Technology, Energy, Real Estate, Discretionary, Industrials, Aerospace, Utilities, and Telecommunications — each represented by a dedicated 5-stock iQUANT.pro strategy built on sector-specific factor models.
From those 12, the first cut is a momentum filter: each strategy is ranked by its 36-month Relative Strength Index (RSI), and the bottom half is removed. This step isolates the six sectors with the most sustained long-term price strength, filtering out areas of the market that have been losing ground on a multi-year basis regardless of short-term noise.
From the remaining six strategies, a second filter is applied: the three with the lowest long-term standard deviation are selected. This step does not simply identify what is strongest — it identifies what is strongest and most consistent, favoring sectors whose momentum has been achieved with the least volatility. The final portfolio holds the 15 stocks drawn from those three top sectors, reconstituted every month.
Potential Benefits
Starting with 12 purpose-built sector strategies means the raw material feeding this model has already cleared a meaningful bar. Each sector strategy is built on factors specific to that sector's economics — so before the Bat out of Hell filtering even begins, the candidates have already been through a rigorous selection process within their own peer group.
The two-step filter is where the model is unique. The 36-month RSI window is deliberately long — this is not a model chasing last month's winner. It is looking for sectors that have been building genuine price leadership over years, not lurching upward between sharp drawdowns. The standard deviation filter then adds a final quality check, ensuring the sectors that make the cut are not just strong but consistently strong. In that sense, volatility here is less a risk measure and more a signal of conviction — a sector trending steadily in one direction tells a very different story than one that simply had a good quarter.
Monthly reconstitution keeps the model current. Markets rotate, and a sector that earned its place in the portfolio last quarter may not deserve it this quarter.
Potential Risks: Concentrating 15 stocks across just three sectors means the portfolio carries meaningful sector-specific risk — a regulatory shift, a commodity shock, or a macro development affecting any of the three selected industries can move the portfolio considerably. The RSI and standard deviation filters are both backward-looking by design, which means the model will always be somewhat late to recognize a genuine sector rotation — it may hold a fading sector for several months before the signal deteriorates enough to trigger a change. Monthly reconstitution reduces but does not eliminate this lag, and in fast-moving markets, the one-month cycle may still feel slow relative to how quickly conditions can shift.