As U.S. markets have recently witnessed, sudden bouts of volatility can quickly upend bull market conditions, especially in an aging business cycle. While investors may still want to capture further upside potential as the economy continues to expand, more are concerned about downside risks that can impede further gains.
On the upcoming webcast, A Survival Guide to Market Volatility, Edward Lopez, Head of ETF Product Management for VanEck, and Stephen Blumenthal, Executive Chairman and Chief Investment Officer at CMG Capital Management Group, will highlight a dynamic investment strategy driven by institutional-level expertise from Ned Davis Research that could help investors enhance long-term investing and better manage downside risks.
Specifically, the VanEck Vectors NDR CMG Long/Flat Allocation ETF (NYSEArca: LFEQ) can provide investors with an investment solution that offers a systematic approach to preserve capital by increasing cash when market health is weak and participating in uptrends with a full allocation to equities when the markets are strong.
LFEQ tries to reflect the performance of the Ned Davis Research CMG US Large Cap Long/Flat Index, which follows trade signals that dictates the portfolio’s equity allocation ranging from 100% fully invested or “long” S&P 500 exposure to 100% in cash or “flat” Solactive 13-week U.S. T-Bills.
The index’s model follows a two-step process. The first step measures trend following and mean reversion within the S&P 500 industry groupings to determine a bullish or bearish market environment. Additionally, the model applies a risk filter process to ensure that all of the price-based industry level indicators are effective over time.
The second step calculates the scores taken from the first phase to produce the equity allocations of the index. When the index is not completely long or flat, either 80% or 40% of the portfolio will be allocated to the S&P 500, with the remainder allocated to the Solactive 13-week U.S. T-bill Index.
LFEQ current portfolio positions include about 41.5% in S&P 500 and 58.8% U.S. Treasury Bills.
Financial advisors who are interested in learning more about managing market volatility with ETF strategies can register for the Tuesday, March 12 webcast here.