- This model only holds fixed income asset class ETFs, never equity. It significantly out-performs the S&P 500 ETF (SPY) over longer periods by strategically switching holdings for risk-on and risk-off situations.
- It uses three previously published market timing algorithms, the ModSum Timer, the YieldCurve Timer, and the Cyclically Adjusted Risk Premium (CARP) to define risk-on, risk-off, and hedging periods.
- During risk-on periods, as indicated by the ModSum Timer and the CARP, the model holds the SPDR Bloomberg Barclays Convertible Securities ETF (CWB).
- During risk-off periods the model switches to iShares 20+ Year Treasury Bond ETF (TLT).
- Near, or during recession periods, as indicated by the YieldCurve Timer, the model is hedged with the iShares 7-10 Year Treasury Bond ETF (IEF), irrespective of the risk situation.
The strategy described here demonstrates that contrary to the accepted believe investing in fixed income can produce superior returns to equity investments. This model uses three previously published market timing algorithms to define risk-on, risk-off, and hedging periods.
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