ETF Strategic Rotation

Description


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RAAMPS uses a unique proprietary four step process using both fundamental and technical analysis. We actively manage our portfolios in an attempt to achieve solid returns and also mitigate risk.

We screen potential investments by focusing on specific fundamentals and tendencies. However, we have found that screening alone offers little alpha and insufficient protection. It creates a symbolic balance by allowing base portfolios to focus on different elements. Next, we use our proprietary ranking algorithms to select the strongest stocks within the basket of stocks we got from our screen. It is our belief that this step provides the significant alpha based on our past performance of our buy and hold portfolios.

Most of our portfolios are actively managed using term sentiment trading algorithms. These algorithms initiate buys and sells, taking human emotion out of the portfolio management and allowing for the process to be repeatable, therefore, making the performance repeatable as well.

Lastly, we refresh each of the portfolios using the steps outlined above. We take out stocks that are not active and/or under-performing and replace them with the strongest stocks as indicated by our screening and ranking process. This helps to increase the likelyhood of significant alpha by taking advantage of the sector rotations that occur in the broader markets.

The RAAMPS process was established to create asset protection through actively managing the risk of holding a particular portfolio. We expect to see smaller gains during market runs and smaller losses during market corrections. Historically on a monthly basis we have captured 94% of the upside while limiting our losses to 46% during monthly corrections, however this figure varies, please check the latest report for the most recent capture ratios. Past performance shows that while we achieved the goal of reducing losses during corrections we actually have not had to forgo significant gains during market runs.

The RAAMPS ETF Strategic Rotation is built by using both a screening process and our RAAMPS methodology. The screening process starts with a universe of over 2,000 U.S. traded Exchange Traded Funds (ETFs). We have found that due to the nature of ETFs, which is to bring together hundreds of similar holdings within a fund, an important aspect is cost. Therefore, the first screen is to exclude any funds that have an annual cost greater than 10 basis points. This gives us about 120 funds that make up the RAAMPS ETF Universe. From there, we add several more screens including dividend income, strength within their industry, historical performance, both historical and projected growth of their industry, as well as a few others. As an independent fiduciary advisory firm we do not favor one company over another; such as Vanguard over Schwab. We instead evaluate funds based on their projected strength in providing a return for our clients over the mid-term.

Once we have our universe of ETFs we use our RAAMPS methodology quarterly to define which funds to hold. Rotations can go between Market Capitalization: Mega, Large, Medium and Small; Style: Value vs Growth; Sectors; and Type of Asset: Bonds vs Equity. We have found that 13 holdings optimize the effect our RAAMPS methodology has on the performance and risk aversion. This portfolio is similar to Ultimate Income in that we are fully invested at all times. In this portfolio, dividends are paid out in cash and used to reinvest in any new positions that are added to the portfolio during the rotation adjustment. By using our RAAMPS methodology, we expect the portfolio returns to be similar to the boarder market during bull markets however because of our rotation process, we see the portfolio providing protection and having higher than market returns during market corrections.

Disclosures


SkyOak Wealth Management (“SOWM”) is a registered investment adviser with the Securities and Exchange Commission.  We have provided this information regarding your account(s) based on sources we believe to be accurate.

This material (or any portion thereof) may not be copied or distributed without SOMWM’s prior written approval.  Statements are current as of the date of the material only.  The information provided in this presentation should not be considered a recommendation to purchase or sell a particular security. Any specific securities identified do not represent all of the securities purchased, sold or recommended for advisory clients, and may be only a small percentage of the entire portfolio and may not remain in the portfolio at the time you receive this report.  You should not assume that investment decisions we make in the future will be profitable or will equal the investment performance of the past.

The standard fee schedules for SOWM’s strategies are shown in the firm’s Form ADV Part 2. SOWM and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone unaffiliated with SOWM of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.

The performance shown is for the stated time period only; due to market volatility, each account’s performance may be different.  Returns are shown net of management fees, trading costs, and other direct expenses, but before custody charges, withholding taxes, and other indirect expenses. The returns shown assume the reinvestment of dividends and other income.  Performance results for one year and less are not annualized.  The performance shown is for the stated time period only; due to market volatility, each account’s performance may be different.  Returns are shown net of management fees, but does not account for trading costs and other fees as may be charged by your investment advisor.  The returns shown assume the reinvestment of dividends and other income.  In the case of projected performance and cash flows, it is presented in response to client’s request.

Past results are not necessarily indicative of future performance and are no guarantee that losses will not occur in the future.  Future returns are not guaranteed and a loss of principal may occur.  The standard deviations, information ratios and allocation targets may be higher or lower at any time.  There is no guarantee that these measurements will be achieved.

Results are calculated by Morningstar.  Results based on simulated or hypothetical performance have certain inherent limitations. Unlike the results shown in an actual performance record, these results do not represent actual trading. Also, because these trades have not actually been executed, these results may have under-or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated or hypothetical trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to these being shown.

Please note that this presentation does not comply with all of the disclosure requirements for an ERISA “section 404(c) plan,” as described in the Department of Labor regulations under section 404(c).  Plan sponsors intending to comply with those regulations will need to provide the plan participants with additional information.  The information provided in this presentation does not constitute individual investment advice for a participant or investor, is only informational in nature and should not be used by a participant or investor as a primary basis for making an investment decision.

The performance shown is compared to several indexes shown herein. Broad-based securities indices are unmanaged and are not subject to fees and expenses typically associated with managed accounts or investment funds. The number and types of securities found in the index can differ greatly from that of the accounts held in the strategy shown. Investments cannot be made directly in an index.