- The iM-Bond Market Trader exploits the fact that, generally, when equity returns are good high yield bonds outperform investment grade bonds.
- When equity performs well the model invests in one of the high yield bond ETFs HYG, JNK, or EMB.
- If stock market climate deteriorates the model switches to Treasury Bond ETF IEF.
- Backtesting over the preceding 20 years the model showed a simulated annualized return of 14.6% with a maximum drawdown of -9.6%, versus 5.0% and -9.3% for benchmark ETF BND, respectively.
- Simulations also show that the model’s returns over any calendar year are positive and exceeded those of BND.
This model uses only four fixed income ETFs:
Read more >