iQ Domestic Income Model
INVESTMENT OBJECTIVE
The iQ Domestic Income Model seeks to provide current monthly income with capital appreciation as a secondary objective.
STARTING UNIVERSE
The iQ Domestic Income Model selects Closed-End and Exchange Traded funds from the following Thomson Financial universe:
Alternative Income | Municipal Debt | Convertible Securities | Investment Grade Debt | Flexible Income | U.S. Government | Loan Participation | U.S. Mortgage | High Yield Debt
PROCESS
Begin with every domestically-traded closed-end and exchange-traded domestic income fund (including funds that own Treasury Inflation Protection bonds).
Rank by trading volume and keep the top 100.
Rank the remaining 100 funds by 6-month exponential price momentum and keep the top 40.
Rank the remaining 40 funds by 24-month Relative Strength Index (RSI) and select the top 10.
Rank the remaining 10 funds by dividend yield and keep the top 5
Re-balance every 3 months.
A rules-based approach to selecting income ETFs
There are several benefits to using a rules-based approach when investing in income ETFs:
Systematic and Consistent: A rules-based approach ensures a systematic and consistent selection of income ETFs, removing emotions and biases from investment decisions.
Transparent: A rules-based approach uses predefined criteria, making the investment strategy transparent and easily understandable for performance monitoring.
Backtested: Backtesting allows investors to evaluate strategy performance over time, using historical data to simulate potential profitability and assess effectiveness.
Bond ETF strategies involve investing in exchange-traded funds (ETFs) that track bond markets, aiming to provide exposure to fixed-income securities. While these strategies seek to generate income and preserve capital, they come with inherent risks, and the performance can be influenced by interest rate fluctuations, credit risks, and market conditions.