iQ Open Architecture Alternative Fund Momentum Model
INVESTMENT OBJECTIVE
The revolutionary iQ Open Architecture 401k Alternative Fund Momentum Model seeks risk-adjusted capital growth by selecting five “alternative” mutual funds through a rules-based approach.
RULES-BASED PROCESS
The iQ Open Architecture 401k Alternative Fund Momentum Model selects the five “alternative” mutual funds by utilizing the following time-tested and rules-based strategy.
The model starts with a base selection of all managed futures, market neutral, and event-driven (i.e. merger arbitrage) mutual funds clearing through National Securities Clearing Corporation (NSCC).
The model then selects the top four alternative mutual funds based on 6-month Relative Strength Index (RSI), 14-month Money Flow Index (MFI) and 60-month downside capture ratio (versus the S&P 500 Index).
The Model reconstitutes every Feb, May, Aug, Nov
Potential Benefits of the iQ Open Architecture Alternative Fund Momentum Model.
The iQ Open Architecture 401k Alternative Fund Momentum Model offers several potential benefits for investment advisors:
Diversification: By selecting from a base of managed futures, market-neutral, and event-driven mutual funds, the model provides exposure to a variety of alternative investment strategies. This diversification can help reduce overall portfolio risk by spreading investments across different low-correlated asset classes and investment styles.
Performance: The model utilizes a time-tested and rules-based strategy that incorporates metrics such as the 6-month Relative Strength Index (RSI), 14-month Money Flow Index (MFI), and 60-month downside capture ratio. These metrics help identify mutual funds with strong momentum and downside protection potential, which may lead to enhanced performance over time.
Risk Management: The inclusion of downside capture ratio in the selection process emphasizes the importance of managing downside risk. By focusing on funds with lower downside capture ratios relative to the S&P 500 Index, the model seeks to mitigate losses during market downturns and preserve capital.
Transparency and Objectivity: The model's rules-based approach provides transparency into the selection process, allowing investors to understand the rationale behind fund selection. Additionally, the use of objective criteria such as RSI, MFI, and downside capture ratio helps remove emotional biases from investment decisions.
Overall, the iQ Open Architecture 401k Alternative Fund Momentum Model offers the potential for diversification, enhanced performance, effective risk management, and transparency in fund selection, making it a compelling option for inclusion in investment portfolios.