iQ ETF Style Box Rotation Model - Quarterly

IMPORTANT! In any given 3-month period, the iQ ETF Style Box Rotation Model - Quarterly can be heavily allocated to money market / equivalents.

INVESTMENT OBJECTIVE

The iQ ETF Style Box Rotation Model - Quarterly seeks to provide risk-adjusted returns in excess of the S&P 500 Index by selecting four style box exchange-traded funds (“ETFs”) based on a time-tested dual factor technical strategy.

RULES-BASED PROCESS

The iQ ETF Style Box Rotation Model - Quarterly investment model utilizes an elegantly robust and unique strategy that combines style box rotation with quarterly technical indicators.

The Model begins with a starting universe of ten technical strategies (one for each domestic style box) and selects the four strategies furthest based on 6-month Relative Strength Index (RSI) and 11-month price momentum.  Each market timing strategy is unique to its underlying style box and can take a long or cash position in any given seasonal quarter (Feb, May, Aug, & Nov). 

The style boxes from which the Model selects its four strategies are:

• Large Cap (Core, Growth, & Value)

• Mid Cap (Core, Growth, & Value)

• Small Cap (Core, Growth, & Value)

• Micro Cap (Core)

Why rotate between style boxes?

Advisors looking to leverage market cycles and changing investor preferences might find it beneficial to rotate between different investment style boxes for several reasons:

1. Diversification: Investing across various styles, such as value, growth, and income-focused stocks, provides diversification benefits. By rotating between these styles, you can harness different growth potentials and reduce overall portfolio risk, potentially enhancing returns.

2. Risk Management: Adjusting your portfolio allocation in response to market conditions can help manage risk. For example, during economic uncertainty, investors may prefer more defensive, income-oriented investments like value stocks, while in stronger economic periods, growth-oriented investments may offer more appeal.

3. Opportunity for Higher Returns: Rotating between style boxes allows investors to take advantage of shifting market trends and investor preferences, which can potentially lead to higher returns. By investing in styles that align with current market conditions, you may be able to capitalize on these trends for greater gains.

However, it's important to note that rotating between investment style boxes can also come with risks, such as missing out on potential gains if the market does not behave as expected.