iQ International Fund Risk On Risk Off Model

IMPORTANT! The model may heavily allocate to cash/money market in certain months.

INVESTMENT OBJECTIVE

The iQ International Fund Risk On Risk Off Model seeks to achieve capital appreciation with a focus on generating positive returns in both bull and sustained bear markets by tactically allocating between risk-on (international stock mutual funds) and risk-off (money market) assets.

RULES-BASED SELECTION PROCESS

The iQ International Fund Risk On Risk Off Model utilizes six unique quarterly technical strategies.

Each of the strategies represent 16.67% (or 1/6th) of the Model’s allocation.  If all six of the factors are “risk on”, then 100% of the Model is allocated to five international mutual funds.  If 3 of the 6 indicators are “risk on”, then 50% of the Model allocates to international stock mutual funds while the other 50% allocates to money market.

When the Model allocates to international stock mutual funds, it utilizes the following (quarterly) strategy:

• Begin with a starting universe of all international stock mutual funds that are NTF (no transaction fee) on most of our members’ platforms

• Sort by 17-month exponential price momentum and select the top 20%

• Sort the remaining mutual funds by long term technical indicators and select the top 5

  The model reconstitutes every Feb, May, Aug, and Nov.

Benefits of International Mutual Fund Risk On / Risk Off strategies

Utilizing a "Risk-On/Risk-Off" investment strategy, where the approach toggles between international stock mutual funds (risk-on) and money market funds (risk-off) depending on market conditions, can offer several potential benefits:

1. Diversification: By alternating between international stock mutual funds and money markets, investors can benefit from asset diversification. International stocks can provide exposure to various economies and sectors, whereas money markets provide a stable, low-risk investment.

2. Market Adaptability: This strategy enables advisors to respond to changing market conditions. During a risk-on phase, investors can take advantage of growth opportunities in international markets. In a risk-off phase, they can protect their capital during market downturns by shifting to more secure assets such as money market funds.

3. Advisors can manage risk exposure by switching between higher-risk and lower-risk assets. This is especially useful for those who prefer to actively manage risk rather than maintain a constant risk level.

4. Winning by Losing Less: When markets are bullish, international stocks often offer higher return potential than more conservative investments. Investors can potentially increase their returns by investing in stocks during these times.

5. Capital Preservation: When markets are volatile or bearish, moving assets to money market funds can help preserve capital. These funds are typically more stable and less vulnerable to market fluctuations.

6. Maximizing Opportunities: By investing in international stocks during market upswings, investors can maximize opportunities for growth. In contrast, they minimize losses by shifting to money markets during downturns.

7. Emotional Balance: This approach can provide investors with peace of mind if they are concerned about market volatility. Anxiety can be reduced by knowing there is a plan in place to switch to safer investments during downturns.

The primary risks of any "Risk-On/Risk-Off" investment strategy include reliance on the accuracy and timeliness of technical indicators and potential lag in responding to market changes.