iQ Sector Fund Allocation Model
IMPORTANT! In any given 3-month period, the iQ Sector Fund Allocation Model can be heavily allocated to money market / equivalents.
INVESTMENT OBJECTIVE
The iQ Sector Fund Allocation Model seeks to outperform the S&P 500 index by systematically reallocating assets each seasonal quarter, based on predictive indicators, to the sectors most likely to see appreciable growth.
RULES-BASED PROCESS
The iQ Sector Fund Allocation Model employs a sophisticated technical strategy, tailored uniquely for each of the eleven sectors of the S&P 500, to decide whether to take a long position in the sector or to hold cash.
In addition to this market timing mechanism, the model further distinguishes itself by implementing a distinct strategy for each sector to select the most appropriate mutual fund to represent that sector. This selection process, conducted every seasonal quarter, is contingent upon the issuance of a 'long' signal by the technical strategy. It involves a rigorous evaluation of mutual funds based on key quantitative metrics, ensuring that the chosen fund is best positioned to capitalize on the anticipated sector growth.
By integrating these two layers of strategic decision-making - market timing and fund selection - the iQ Sector Fund Allocation Model aims to offer a dynamic and responsive investment approach. This strategy is designed not only to adapt to the evolving market landscape but also to harness the unique strengths and opportunities presented within each individual sector, striving to optimize returns for advisors.
The model reconstitutes every Feb, May, Aug, and Nov.
Benefits of Sector Allocation Strategies
The iQ Sector Fund Allocation Model, which employs a multi-strategy approach to selecting domestic stock mutual funds, offers several benefits:
Tailored Technical Strategies: Each S&P 500 sector is analyzed using a unique technical strategy, ensuring decisions are finely tuned to specific market dynamics of each sector.
Dynamic Positioning: The model alternates between long positions in sectors and cash, allowing for flexibility in response to market changes.
Quarterly Fund Selection: A distinct strategy is employed every quarter to select the most suitable mutual fund for each sector, based on a comprehensive evaluation of performance and alignment.
Risk Mitigation: By diversifying across different sectors and adjusting allocations between being long and holding cash, the model aims to mitigate risks associated with market volatility.
Growth Opportunities: The model is designed to identify growth opportunities in each sector, potentially enhancing portfolio performance.
Responsive Investing: The model's quarterly reconstitution allows for continual adaptation to new market trends, keeping the portfolio aligned with current market conditions.
The iQ Sector Fund Allocation Model, like all market-dependent investments, is subject to market risks, such as fluctuations in sector performance and overall market volatility, which can affect investment returns. Furthermore, the model's technical strategies and fund selection process may vary in effectiveness, and there is no guarantee that the model's approach will consistently produce positive results or outperform other investment strategies.