iQ Bulls of the Dow Model

INVESTMENT OBJECTIVE

The iQ Bulls of the Dow investment model seeks to provide returns in excess of large-cap equity indices by investing in stocks of the Dow Jones Industrial Index with strong free cash flow at a value.

This model has been constructed to be a core allocation and is part of our “Low Trading” lineup.

INVESTMENT PROCESS - Elegant in its simplicity

The iQ Bulls of the Dow investment model implements the following rules-based process:

  • Begin with the Dow 30 blue-chip Index.

  • Sort the thirty stocks by free cashflow-to-enterprise value and select the top ten.

  • The Model continues to hold the ten stocks until one drops out of the top 20.

This model reconstitutes every February, May, August and November and averages less than one position change every reconstitution.

A Word About Blue-Chip Stocks

Blue chip stocks may be considered great investments for several reasons.

Firstly, blue chip companies are typically well-established, financially stable, and have a long history of consistent earnings and dividend payments. These companies tend to have strong brand recognition and a dominant market position, which can provide them with a competitive advantage. As a result, they tend to be more resilient during economic downturns and may be better equipped to weather market volatility compared to smaller or less established companies.

Secondly, blue chip stocks are generally viewed as low-risk investments. While no investment is completely risk-free, blue chip companies have a track record of consistent performance, which can make them more predictable and less volatile compared to other investments. This can be particularly appealing to investors who are looking to minimize risk and preserve capital.

Thirdly, blue chip stocks tend to offer attractive dividend yields. Because these companies are typically financially stable, they may be more inclined to pay out dividends to shareholders as a way to return value to them. Dividend payments can provide investors with a steady stream of income, which can be particularly appealing to retirees or other investors who rely on their investments to generate income.

Finally, blue chip stocks are generally more liquid compared to smaller or less established companies. Because these companies have a large market capitalization and a significant number of shares outstanding, there tends to be a high level of trading activity in their stock. This can make it easier for investors to buy and sell shares, which can be particularly important for those who need to access their capital quickly.

Overall, blue chip stocks can be great investments for those who are looking for stability, predictability, and income.