WBI’s Trend Switch strategies provide investors with a moderate risk tolerance simple solutions that attempt to optimize return throughout market cycles. The long-term performance potential of our Trend Switch products offers advisors and clients an exciting alternative to existing momentum trend-following products.
Look Beyond Momentum Models
Most trend-following models in use today are momentum-based, measuring price trend changes to develop on or off signals. These fairly simple models can provide effective risk and return management in most market cycles but in our experience, are not powerful enough to deliver consistently competitive results across rapidly changing market cycles. Price trend reversions can trigger a buy or sell signal that turns out to be a head fake, which can lead investors to be fully invested as markets are falling or sitting in cash as markets rise.
Developing Sophisticated Risk Signals
WBI’s time-tested trend-following models incorporate what we believe is a more powerful combination of macroeconomic, corporate and market price trend indicators. We have used these market and econometric trend models in our quantitative risk management process for almost 30 years to tighten or loosen the firm’s overall risk management approach.
Equity and Bond Models
Bull|Bear Equity Model
The WBI Trend Switch Equity model combines macroeconomic factors and technical market trends to produce a weekly signal indicating “risk on” or “risk off”. The model objectives are to:
• fully participate in bull market returns as long as trend risk indications are favorable
• harvest gains and protect capital during unfavorable periods by moving to cash equivalents before reaching a bear market inflection point
If the model indicates that risk conditions are low for equities, the strategy will be invested in either U.S. All Cap, Large Cap or Small and Mid-Cap equities and ETFs. An indication that risk is high for equities would trigger portfolio allocations to protect capital by switching to short-term Treasuries or cash equivalents.
Bull|Bear Bond Model
The WBI Trend Switch Bond model consists of two independently calculated models: a Quality Model and a Duration Model. The models assess conditions likely to affect the relative performance of U.S. High Yield Bonds, U.S. Investment Grade Corporate Bonds, and U.S. Treasuries and determine their sensitivity to credit quality and duration. The models consider:
• macroeconomic factors, interest rates, credit spreads, valuation, momentum and technical market indicators in fixed income, equity and commodity markets
Revolutionary Multi-Asset Equity and Bond Models
We believe the synchronization of our Equity and Bond models is a breakthrough in trend risk and return management. The blended model approach can take maximum advantage of the noncorrelation between equity and bond asset classes that emerges at market inflection points. As investor preference for risk and return shift in bear market cycles, investors will typically reallocate away from equities and into bonds for income and capital protection. By combining models, signal integration can reduce loss and enhance return by maximizing opportunity across asset classes.
Our blended Trend Switch strategies evaluate Equity model signals first, allocating to U.S. equities if risk indications are low. If the model indicates conditions for risk are high in equities, the strategies look to the Bond Model signal for credit quality and duration and then invest in bonds or ETFs.
An investment in the Funds is subject to risk, including the possible loss of principal. There is no guarantee the Advisor’s investment strategy or quantitative models used in the investment strategy will be successful. To the extent that a Fund invests in dividend-paying equities, if stocks held by the Fund reduce or stop paying dividends, the Funds’ ability to generate income may be affected. Small and medium capitalization companies may involve greater volatility and risk than investing in larger and more established companies. Foreign and emerging market securities carry additional risks such as currency fluctuation, economic or financial instability, lack of timely or reliable financial information, or unfavorable political or legal developments.
For a full list of investment risks associated with the funds, including but not limited to market risk, portfolio turnover risk, securities business risk, mortgage-backed securities risk, master limited partnership risk, real estate investment trust risk, ETF risk, and trading price risk, please read the prospectus.