iQ Risk On / Risk Off High Yield Stock Model

  • Targets a higher current yield than domestic corporate high yield (junk) bond indices

  • 15.59% max draw-down

  • 7% downside capture ratio

CLICK HERE for a complimentary Model Fact-card.

The iQuant Risk On / Risk Off High-Yield Stock Model was built to provide Investment Professionals a means by which they can earn income and growth at a time when yield is hard to find.
— Rick Gonsalves

INVESTMENT OBJECTIVE

The iQUANT.pro Risk On / Risk Off High Yield Stock Model utilizes four non-correlated factors to determine an allocation between all cap high-yield stocks (Risk On) and long-term Treasury bonds (Risk Off).

PERHAPS THE MOST CUTTING-EDGE HIGH-YIELD STOCK MODEL YOU’VE SEEN

The iQUANT.pro Risk On / Risk Off High-Yield Stock Model is a “first of”…

The Model utilizes the following four non-correlated factors to determine its allocation to stocks and/or bonds:

  • Technical (month-end price to 9-month moving average of Wilshire 5000 Index)

  • Macro (Yield Curve)

  • Valuation (S&P 500 Price-to-Earnings Ratio)

  • Seasonal (Sell in May but stay based on mid-cap ETF Money Flow Index)

HOW DOES THE MODEL WORK?

Each of the aforementioned factors account for 25% of the Model’s allocation.  If all four of the factors are “risk on”, then 100% of the Model is allocated to stocks.  If 2 of the 4 indicators are “risk on”, then 50% of the Model allocates to stocks while the other 50% allocates to long-term United States Treasury bonds.

THE “risk on” STOCK SCREEN

When the Model allocates to stocks, it utilizes the following (monthly) all-cap high-yield screen:

  • Start with the largest 2,000 domestically-traded stocks (as measured by the prior month-end market capitalization)

  • Sort by Dividend Yield and select the top 60 stocks

  • Sort the remaining 60 stocks by 12-month less 1-month price momentum and select the top 40 stocks

  • Sort the remaining 40 stocks by 3-year seasonal monthly price momentum and select the top 10 stocks.

    The Model re-balances monthly