iQ Sector Rotation Model

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INVESTMENT OBJECTIVE

The iQ Sector Rotation Model seeks to outperform the market by dynamically rotating sectors using a systematic data-driven approach. It identifies high-potential sectors for outperformance while managing downside risk in market fluctuations.

UNEMOTIONAL & RULES-BASED PROCESS

The iQ Sector Rotation Model implements the following rules-based process:

1.Starting Universe = The following 11 S&P 500 sectors

Basic Materials | Discretionary | Energy | Financials | Healthcare | Industrials | Real Estate | Staples | Technology | Telecom | Utilities

2.Sort the eleven sectors by 10-month max drawdown and select the three sectors that have displayed the least amount of drawdown.

3.Each of the three remaining sectors is represented by its own unique 5-stock strategy for a portfolio of 15 stocks.

Potential Benefits:

Potential benefits of a sector rotation model based on sector maximum drawdown include:

• Risk Management: Minimizes downside risk and protects capital during market downturns through sector monitoring and rotation based on max drawdown.

• Enhanced Performance: Seeks improved risk-adjusted returns compared to static allocation or random sector selection by capitalizing on sectors with lower max drawdowns.

• Adaptability: Allows flexibility to adapt to changing market conditions by rotating out sectors with higher drawdowns in favor of more resilient ones.

• Diversification: Reduces concentration risk by diversifying investments across different sectors, potentially enhancing overall portfolio diversification.

• Alignment with Market Trends: Aligns investments with current market trends by focusing on sectors showing resilience during volatility, potentially capturing outperformance.

• Active Management: Involves active research and management to capitalize on sector-specific opportunities and market inefficiencies.

• Risk Reduction: Mitigates portfolio volatility and potential losses by avoiding or reducing exposure to sectors with high max drawdowns, enhancing overall risk management.

Sector rotation strategies involve shifting investments among different sectors to capitalize on market trends. These strategies aim to enhance returns by identifying sectors likely to outperform and avoiding those expected to underperform. However, they carry inherent risks, as accurately timing sector movements is challenging. Past performance of sector rotation strategies does not guarantee future results. Market conditions, economic changes, and unforeseen events can impact performance.