Seeks to capture a significant portion of broadly diversified U.S. equity market growth over a full market cycle while reducing the impact of severe and prolonged market declines.

Why does managing risk matter?


  • Equity


  • Value, Momentum, Defensive, Trend

Trade Offs

  • May not be tax efficient
  • May not closely track the strategy’s benchmark
  • Does not seek outperformance versus equity market benchmarks
  • Unlikely to protect against short-term volatility

Strategy Process

  • Employ a systematic trend following approach that can move the portfolio entirely to high quality, short-term fixed income in effort to avoid significant losses.
  • When invested, allocate across a diversified set of “style premia.”
  • Review tactical models on a weekly basis.

Detailed process information available in the Document Center.

Research on Trend Following

  • A Trend Equity Primer: An introduction to trend equity, a strategy that seeks to benefit from the long-term, expected equity risk premium and the convex payoff of trend following.

  • Two Centuries of Momentum: Exploring the rich history of both relative and time-series momentum.

  • Read more.

Questions & Answers

Smart Beta – or Factor – investing is an approach where a manager systematically tilts their portfolio away from a traditional market capitalization weighted approach in order to gain exposure to a particular category or style of stock that he believes will create excess return or reduce risk over time.  For example, over-weighting undervalued stocks and under-weighting overvalued stocks would create a tilt towards the value factor.  Other academically supported factors include size, momentum, low volatility, and dividend growth.

We invest in exchange traded funds (ETFs) representing the equity factor tilts we wish to incorporate.  We utilize ETFs as the building blocks of its portfolios because they are a transparent, cost-effective, and highly liquid means of gaining and managing exposure to particular asset classes and market sectors.

This strategy has the flexibility to invest 100% of the portfolio in short-term U.S. Treasuries in effort to avoid significant drawdowns.  The systematic mechanism we employ to dictate this decision is based upon the number of primary U.S. equity sectors (e.g. financials, utilities, consumer staples, et cetera) exhibiting negative trends.  When more than 5 of the 9 sectors begin exhibiting negative trends – what we believe is a sign of more systematic risks – the portfolio will begin to build a defensive position.

The portfolio is evaluated on a weekly basis.  In stable market environments, we expect to make few, if any, portfolio changes; in higher risk environments we expect to trade the portfolio more frequently in effort to keep up with changing market dynamics.

Ready to rethink how you manage risk in your portfolio?

Investment Ideas

Manage Risk

The strategy employs a trend-following based dynamic hedging strategy.  For investors concerned about equity market volatility, this portfolio can be employed to provide access to equity market growth without necessarily exposing them to the full potential of market drawdowns.

Go Beyond Styleboxes

Traditional investment approaches put investors into a box.  Recent academic evidence suggests that factor tilts can be a far more effective means of accessing the potential for generating excess returns – and often at lower costs than traditional active managers.

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