iQ S&P 500 Efficiency Model
INVESTMENT OBJECTIVE
The iQ S&P 500 Efficiency Model is an annual model that seeks to outperform the S&P 500 index by selecting 20 stocks based on Capital Efficiency, Relative Strength Efficiency, and Price Momentum Efficiency.
PROCESS
The iQ S&P 500 Efficiency Model selects its holdings based on the following rules-based investment process:
Starting Universe = The S&P 500 Index
Sort the 500 companies (of the S&P 500 Index) by Operating Earnings Yield plus Share Buyback Yield and select the top 100.
Sort the remaining 100 companies by 18-month Relative Strength Index (RSI) and select the top 60 stocks.
Sort the remaining 60 stocks by risk-adjusted price momentum and select the top 20 stocks.
This model reconstitutes the first trading day of each February.
Investing in S&P 500 stocks
A targeted strategy that selects from a universe of stocks that comprise the S&P 500 index has several benefits. Benefits may include:
Established and Reputable Companies: The S&P 500 index includes some of the most well-established and reputable companies in the world, making it a reliable investment option.
Liquidity: The S&P 500 is one of the most widely followed and traded indices in the world. This means that the stocks that comprise the index are highly liquid, which makes it easy for investors to buy and sell shares in the market.
Potential for long-term growth: Many of the companies in the S&P 500 index are leaders in their respective industries and have a track record of steady growth. Investing in a targeted strategy that selects stocks from the index can provide investors with exposure to these companies and potential for long-term growth.
Overall, a targeted strategy that selects stocks from the S&P 500 index can offer investors diversification, reduced research time, transparency, and the potential for long-term growth.
Stock investments involve risks and are not guaranteed to produce profits. The value of stocks can fluctuate based on various factors, including market conditions, economic performance, and individual company performance. Past performance of stocks is not indicative of future results.