The Benefits of Combining Artificial Intelligence with Systematic ETF Investment Strategies

The Benefits of Systematic Investing


A systematic (also called quantitative, algorithmic, or rules-based) investment strategy can provide you with many advantages over the traditional, discretionary approach to selecting investments. This article will delve into the many excellent reasons why more and more investors today are embracing systematic investing, and why ETFOptimize is 100% dedicated to using the systematic approach for the low-cost subscription models in our ETF Investment Strategy Suite.


Two Traditional Investment Approaches

First, let's define the two primary investment approaches that are available to investors: 1) Discretionary Investing, and 2) Systematic Investing.

1) Discretionary Investing is the traditional approach that has been around forever, and which relies on the knowledge and skill of a fund manager, investment advisor, or an individual investor themselves to analyze a relatively limited number of securities with a limited number of indicators, to determine which company shows the greatest likelihood of producing profits and gaining value in the future.

The number of stocks and number of indicators that can be considered in a Discretionary Investment Approach must be relatively limited for a practical reason; i.e., an individual can easily be overwhelmed by the sheer amount of data points available from the many attributes of just one publicly traded company. The stock analyst must then compare 5, 10, or 20 similar companies, each with nearly endless information that must be considered. Recall that in the "old days," successful discretionary investors like Warren Buffett used to read through endless stacks of 10-Qs and other quarterly corporate reports to find companies that meet the investor's discretionary criteria.

Many categories of information can be considered and there are dozens of measures that must be assessed in real-time by the investor/advisor/fund manager. With all that data being compared manually, the task quickly gets out of hand, decision-making progress slows to a crawl, and confusion often ensues.

2) Systematic Investing (also known by the terms quantitative investing, algorithmic investing, data-driven investing, or rules-based investing) is an approach where the investor uses computers and systematic models to operate an automated and consistently reproducible method to select investments.

These systems review many different securities (including ETFs) and, in the case of our models, applies sophisticated composites of uncorrelated indicators, algorithms, ranking systems to drive its ETF-selection and market-risk-assessment decisions. In fact, we employ more than 50 different data sets in the design of our models, with each model using a different set of 10-12 critical indicators that drive stock prices, so that each composite is uncorrelated from the other when combined into our ULTIMATE 6-Model-Combo (9 ETF) Strategy. Combining six uncorrelated models provides ample upside (around 28-30%) with reduced downside risk (-11.13% avg annual drawdown).

The problem with a Discretionary Investing approach is that it relies on an investor's or advisor's experience and knowledge to determine which investments are most appropriate for different conditions. Because accessible, inexpensive computer capabilities simply did not exist for investors before the early 1980s, the Discretionary approach was an investor's only choice - and because it was so deeply embedded in the culture, it still remains the way the majority of investments are made today. However, that status is rapidly changing as investors move vast amounts of money from active, discretionary, stock-selection approaches into a) Passive and b) Systematic Investment approaches.

One reason Discretionary Investing has lingered far past its prime is that mutual fund managers, who have historically made decisions about the vast majority of investor's funds for the last 100 years, are, for the most part, are discretionary investors. Gargantuan industries ($17 trillion) are invariably slow to change, and the only difference between one mutual fund manager and another is their actual stock-picking track record.

The track record of this group of professional advisors is very discouraging. For example, after 10 years, 85% of large fund managers underperform their benchmark (usually the S&P 500), and after 15 years, that underperformance spreads to 92% of managers

These highly paid (but failing) fund managers certainly don't want to give up their 'advantage' to a low-cost and potentially superior quantitative computer program. However, the workload on discretionary investors is extraordinarily high because they are required to constantly monitor financial markets and investment-related news, mentally juggling thousands of possible factors that might affect each of their individual investments, and make impactful decisions involving billions of dollars. There is more than a little stress involved – and that statement applies to both professionals and individual investors.

Discretionary investors are required to have extensive knowledge about how myriad factors are likely to impact each stock in their portfolio, then make the best estimate of the optimum changes to their holdings to meet their goals as market conditions fluctuate. Most importantly, a discretionary investor/manager relies on their judgment as the final determinate of the portfolio's positions and market exposure.

Of course, judgments are subjective decisions; i.e., "one man's trash is another man's treasure," and what is effective for one investor may not be wise for another. The massive amount of knowledge and the number of stressful decisions required to handle a small discretionary portfolio is usually overwhelming to even the most determined investor/fund manager.

Pervasive Disappointment from Discretionary Investing

Not only is discretionary investing overwhelming in the effort and knowledge it requires, but the real disadvantage is that it has little payoff. There are at least two significant limitations to Discretionary Investing; 1) humans have limited capacity to simultaneously contend with the superabundance of complex factors affecting financial assets, and 2) human judgment is subject to behavioral errors, inconsistency, emotional bias, and other psychological and subconscious challenges that investors recognize in hindsight can cause irrational choices resulting in losses.


Long-term annual returns for various types of investmentThe average investor only attains a return of 2.6% over periods of 10 years or more. Using a systematic approach, the ETFOptimize strategies achieve an average annual return of 26.79%. Source: Dalbar, Inc.


Furthermore, when markets get turbulent and the the speed of change quickens to an exasperating level, Discretionary Investors must grapple with rapid-fire, limited information to make subjective and often risky decisions that often go wrong.

Evidence of the inherent problems with a discretionary investment approach is demonstrated by their long-term, average performance, of which there is ample documentation.

According to MorningStar, while the S&P 500 index has an average, long-term real annual return of 6.96% (including dividends). As shown in the accompanying chart, the average individual investor only achieves a long-term return of 2.6% – which is -63% less than an effortless, buy-and-hold approach using the S&P 500 ETF!  The accompanying chart shows the SPDR S&P 500 ETF (SPY) in the second bar from the left with a return of 6.96%, and the rolling 10-year return of the average investor (red bar), producing just 2.6%.

This is the reason why so many view passive ETF investing as their approach of choice for long-term savings goals. However, in this article we will show you that by adding just a small amount of activity to passive investing – with just 3-4 trades a year – an investor using a quantitative strategy in a disciplined manner can triple or even quadruple the average annual return of the S&P 500.


Unexpectedly Wide Range of Outcomes from Buy-and-Hold Approach

Buy-and-hold is a passive investment approach in which an investor buys a diversified number of stocks and holds them indefinitely, without concern for short-term price movements. The modern alternative is to buy one or a few, inherently well-diversified, index-based ETFs, which simplifies the buy-and-hold approach dramatically.

As in-depth investment information became more democratized by the Internet over the last two decades, millions of investors have come to recognize the inherent, unsolvable issues that plague discretionary investing approaches – fundamental problems that apply to armchair amateurs and professional money managers alike. In response to the dismal failure of active, discretionary stock picking and a concern that investors might abandon equity investing 'en masse because of these poor discretionary results, a significant portion of investment industry began supporting the 'Buy-and-Hold' approach to investing as the best alternative. 

Plus, many well-known financial experts, such as Warren Buffett and John Bogle, long admonished investors to buy-and-hold well-diversified index-based ETFs and mutual funds, such as the S&P 500 ETF (SPY). As a result of all this attention in the last decade on the shortcomings of discretionary investing, there has been an enormous growth in assets flowing into low cost, index-based ETFs from buy-and-hold investors. Unfortunately, what no one told these investors is that the buy-and-hold approach has its own set of disappointing outcomes that are almost as dispiriting as those of discretionary investing.

To determine the amount they need to save each month to meet their retirement goals, many buy-and-hold investors using the S&P 500 (or similar index) see that it has a long-term annual return of about 7.5% (about 10% with dividends) and enter that figure into a compound-interest calculator. However, statistics often don't tell the entire story.


Buy-and-Hold:  What They Don't Tell You

What most investors don't realize is that the starting date and ending date of your long-term savings plan can have an enormous influence on the amount you will have accumulated at the end of that time. In reality, the long-term, average return of an index may not be close to what you will attain during your particular investing timespan.

Imagine if you had worked for 40 years and had achieved your financial goals, having saved enough to provide you and your spouse with a comfortable lifestyle in your golden years. You looked forward to the day of your retirement just three months ahead when you would say goodbye to all the good friends you had made at the company over the years. The office was even planning a big party for you on your last day.

However, in the following weeks, the stock market went into a nosedive that saw it plummet -20% in the first week of a severe downturn – almost as bad as what occurred in 1987. Over the subsequent six weeks, stocks fell another -30% and you watched as your buy-and-hold equity account, which had served you well over the last 40 years, dwindled to just half – 50% – of what you had just eight short weeks ago. Devastated by these events and with just half of the money you had saved and counted on in retirement you didn't know what you could do.

In different circumstances, you might have gone in to have a frank talk with your boss and see if you could extend the day, indefinitely, when you are scheduled to retire from the company. However, there was one inconvenient complication: you had spent the last month training your replacement and he was set to take over your position the day after you left, having moved his family halfway across the country for this job.

That would be a frightening nightmare, wouldn't it? However, it's an accurate example of what can happen when you least expect it when using a buy-and-hold investment approach.

The chart to the right shows the wide swath of amounts that a $100,000 investment in the S&P 500 might be worth during one, five, 10, 15, and 20-year periods that began at different times. As you can see, the ranges are quite broad, even during periods as long as 20 years.

An investor might argue that while there is a significant range of returns, during the more typical 40 working years, reversion to the mean would narrow that range of possibilities.

The range of outcomes for the Buy-and-Hold approach is almost as large
as the range for a discretionary approach. Chart courtesy AAII.

However, even that argument doesn't necessarily apply when we consider how much investment markets can fluctuate. For example, the unlucky investor who began saving just before the 1929 market crash would have attained a return that averaged only 2.21% per year over the subsequent 40 years (to 1969), growing a $100,000 investment into just $239,610. Moreover, had the investor been unlucky enough to have selected the wrong index to buy-and-hold, or if the US market becomes like Japan's turbulent nightmare, after 40 years a buy-and-hold investor might have even less money than they contributed to their account during that time.

Bottom line: when it comes to buy-and-hold investing, the year you begin working and saving is the most significant determinant of whether you struggle or thrive in retirement. It's an unfortunate situation for the masses, but by choosing to use a systematic investment strategy you can positively rewrite your financial destiny.

Stocks Have Declined 76.4% of the Time Since 1901

A shocking fact that many don't realize is that since 1901, the stock market has spent 76.4% of the time declining in value or recovering from loss and just 23.6% of the time creating wealth, according to Ned Davis Research, Inc. in Venice, Florida. It's a sad mathematical fact that when investments lose ground, they must make up even more ground just to get back to breakeven, and the greater the loss, the more the relative gain that is required.

For example, 10% loss requires a gain of 11% to get back to breakeven. A 50% loss requires a 100% gain, and to recover from a loss of 75%, the investor must somehow find a way to make 300%, just to get back to zero.

That's where a quantitative investment strategy offers you its most powerful and exciting benefit!  The ETFOptimize quantitative investment strategies analyze tens of millions of bits of data every weekend to provide you with a higher life in confidence recommendation of when to get out of your long equity position so that you don't lose money – as you would have to endure when using a buy-and-hold investment approach. 

But by adding an average of just three trades per year, you can increase your returns by a multiple of more than 500%!

The chart to the right shows the performance of our Asset Allocation 2-4 Strategy, which combines the two optimum equity ETFs with the two optimum fixed income ETFs at any given time. You can see that during the Financial Crisis that began in late 2007 and bottomed in March 2009, a buy-and-hold benchmark of the S&P 500 (SPY) and an all-bonds ETF (BND) lost -40% before it began climbing again. It required five-long years from start to finish just to get back to breakeven.


Buy-and-hold vs. ETFOptimize strategy during Financial Crisis

Buy-and-hold vs. ETFOptimize strategy during Financial Crisis - Statistics


During the same amount of time, our AA-2-4 Strategy lost nothing during the Financial Crisis and instead, gained 215% during those five years, more than quadrupling an investor's savings – at a time when buy-and-hold provided a return of 0%.

Unlike other ETF-based strategies that are available to investors, the ETFOptimize strategies analyze a plethora of indicators from macroeconomic, stock fundamental, and technical indicators to create a high-confidence composite signal of whether your positioning should be bullish or bearish – and the optimum ETFs you should hold at any given time.

The ETFOptimize quantitative strategies have an average maximum drawdown that is less than 1/3rd of the max drawdown of the S&P 500 – so losses are dramatically reduced – which also dramatically reduces your potential for financial-related stress. Then, when conditions become ripe again for a bull market, your systematic strategy will identify that situation early and generate the maximum gain from selecting the optimum ETF position at any given time for your strategy. The result is a set of quantitative strategies that provide an average of nearly five times (521%) the return of the S&P 500 since their inception through the end of 2018.

The Advantages of Systematic Investment Strategies

Over the last 30 years, there has been an exponential improvement in computing power, rapid development of sophisticated analytical software, and significant new thresholds achieved in the accuracy of a vast number of econometric and financial databases. These strides have led to tremendous advances in the fields of investment research and money management. As a result of these technological innovations, systematic investment strategies have become dramatically more effective and are now being embraced by investors at all experience and skill levels – from beginners to the top echelon of financial professionals.

Systematic investment strategies provide an investor with nearly instant analysis of thousands of data points for thousands of potential investments within a fraction of a second. Our Premium ETFOptimize Investment Strategies utilize this robust multitude of data points to determine the most profitable ETF to own at any given time. Our algorithmic systems simultaneously assess more than two-dozen different macroeconomic, internal-market, and fundamental-stock data series. It would take a person several weeks to collect, analyze, evaluate, and calculate this army of data points to arrive at a single investment choice, while it takes our servers a few seconds to perform the same procedure (with (with consistency and accuracy that's out of reach for a human).

Professionals with more than five decades of collective experience in investing and building systematic investment approaches construct the decision algorithms for our Premium ETF Investment Strategy Suite models. Then, after each component of a strategy is carefully crafted, it is back-tested, forward-tested, stress-tested, robustness-tested, out-of-sample tested, stress-tested again then tested again and again with different variables before being considered as a viable addition to our Investment Strategy Suite. Then, in many cases, we run a strategy behind the scenes for many years to make sure that it functions perfectly with out of sample data before we will offer it to the investing public.

Another significant advantage of a systematic investment strategy is that there are no influences on the algorithms from common human behavioral challenges – both physical and psychological – such as fatigue, time limitations, family problems, stress, over-enthusiasm or under-enthusiasm, hopes, fears, mood swings – or the investment decision-maker simply having a rotten day. Instead, our servers coldly, efficiently, and effectively perform their calculations whenever required and with nary a whine.


Systematic Strategies and ETFs: Investment 'Soulmates'

Exchange Traded Funds (ETFs) are another essential component of our subscription-strategy line-up, with ETFs having a long list of benefits over stocks – which explains their immense success and growth over the last 25+ years. Some investment pros try to apply a systematic approach to individual stocks, but the benefits don't compare to what can be attained by using a systematic approach with ETFs. It's almost as if ETFs and quantitative investing were made for one another – as if they are investment soul mates.

Frequently, the decisions related to choosing a particular market segment, sector, industry, or ETF comes from top-down macroeconomic analysis and/or price-pattern analysis. However, the ETFOptimize investment strategies go a couple of steps further than other quantitative ETF approaches by including a bottom-up examination of individual stock fundamentals – calculating and using as a key component of a system such measures as the operating profit or earnings yield of one market sector/ or segment ETF compared to another. 

Another fundamental reason that systematic investment strategies are superior to individual human judgment is that computers can calculate millions, or even billions of instructions per second, while the human brain is quite limited in this regard. Instead, our brains have evolved to identify and focus on the most critical factors necessary for critical decision-making, often casting aside all of the nuanced details of a situation.

However, this quick-focusing aptitude evolved to serve our survival, such as deciding, in a fraction of a second, whether to fight or flee when there is a surprise confrontation with a tiger on a trail in the jungle – and if the latter is best, instantly determining the optimum escape route. This mental faculty is far afield from the far-more-practical ability computers have to juggle reams of pages of detailed data to determine the most appropriate Exchange Traded Fund for an assessment of complicated current conditions.

ETFs are far more influenced by macroeconomics – the 'big picture' in the investment world – than are idiosyncratic, individual stocks, which are usually more influenced by internal factors and details that apply only to a particular company. This is information that is not readily available to the average investor, not included in the quarterly reports, or apparent in the data on an investment website.

An individual stock's price may take off aggressively – for no apparent reason to an outsider, but the key management of that company might know that the rumor mill is churning about interest in a potential takeover of the company by the industry leader – information that can't be reported (yet), but is most assuredly influencing the stock's price today.

That inside information does not affect the entire industry or the price for the index/ETF that represents that industry. Meanwhile, a composite of a dozen macroeconomic-factors will tell a qualitative strategy that one sector is about to excel compared to the rest. For these reasons and many more, broad-based, multi-company ETFs are particularly appropriate for use with quantitative investment strategies, and enhance the ability of a systematic model to make the decisions that achieve prolific investment success.

Misunderstandings About Systematic Investing

Quantitative, rules-based strategies eliminate the all-to-human behavioral biases that can cause losses, or at the very least, inconsistency in an individual's results. However, systematic investing – particularly the ETFOptimize approach – has been misunderstood by some investors to be something it is not. Let's clarify a few of them:
Systematic investing with ETFOptimize is NOT:

• Money Managers making discretionary investment decisions (with a terrible long-term track record);
• High-Frequency Trading or 'HFT' (our strategies make trades with an average of about FOUR MONTHS between transactions);
• Vast numbers of computers robo-trading in a back room somewhere (no robo-trading trading here – professionals monitor every trade for errors and reasonability);
• Math and Physics Ph.D.'s with no investment experience building the models.

Systematic investing with ETFOptimize IS:

Implementing traditional investment principles with sophisticated algorithms;
• Harnessing the modern power of a few state-of-the-art computers to quickly process vast amounts of high-quality data;
• Using as many as 38-different data series in a single strategy to provide robust signals;
• Elimination of the human behaviors and influences that can cause poor investment decisions;
• Strategies built by investors / quantitative model designers with a combined 50+ years of experience. Our strategy designers are engineers and investment professionals with a combined 50 years of investment experience, including every bear market since 1974.

Confidence-Inspiring, Exceptional Performance

The ongoing transfer of nearly $80 billion per month into Exchange Traded Funds (ETFs) has created a significant demand for a way for investors to attain higher performance than the 6% - 8% annual return that is the long-term average for the market. Investors need an automated, systematic approach to select the best, high-performance ETF's at any given time, without the discretionary decisions that have historically resulted in terrible performance.

Most of all, investors want to avoid the return-destroying losses that a portfolio can experience whenever the market enters into a deep correction or bearish conditions. Many investors are discovering the benefits of a systematic, ETF-rotation alternative to passive, index-based investing. By adding just a small bit of activity and rotating from one passive ETF to another a few times a year, returns can be doubled, tripled, and even more.

The ETFOptimize Strategies oversee the selection of ETFs and determine timing and exposure to the market based on real-time conditions, and provide much higher returns at much lower risk than just buying-and-holding a collection of passive ETFs. ETF-based rotation strategies that add a slight bit of activity (with trades occurring only 2-6 times per year) deliver far better returns than index-based ETFs, but with substantially less risk and very little trading activity.

ETFOptimize has constructed a growing suite of quantitative investment strategies that make exclusive use of passive, index-based Exchange Traded Funds (ETFs). By rotating into the optimum ETF at the optimum time, our strategies turn market downturns or selloffs into profitable opportunities instead of potential calamities, reduce the systemic risk in the market, dramatically increase returns, and help investors achieve their financial goals. Because our systems continuously monitor market conditions, investors can achieve these objectives without having to worry about a disaster like the Financial Crisis of 2008-2009 terminating their retirement plans.

An Innovative Improvement to ETF Investment Approaches

Every week, each of our Strategies in the ETF Investment Strategy Suite automatically assess more than two-dozen proven financial market 'tells' with multiple, Wall Street caliber databases to provide our subscribers with signals that, over time, create smooth, high-return investment performance through any kind of market environment – bullish, bearish, or sideways and volatile.

Our models utilize sophisticated algorithms that automatically analyze a broad spectrum of financial, market, and macroeconomic data series to make high-probability, systematic decisions about the optimum ETF to hold in a wide variety of conditions. Whatever drama is occurring in the market is irrelevant, because the ETFOptimize strategies produce consistent profits, month after month – year after year.

We know of no other subscription-strategy provider utilizing a comprehensive set of macroeconomic signals, as well as multiple market-breadth indicators, revenue, profitability, and many other aspects of the various market segments, sectors and industries to determine the most efficient and profitable choice of ETF to hold at any given time. Other ETF strategy providers are almost always using simple quantitative approaches that depend on single-factor analysis of a characteristic such as Momentum.  View the Proprietary Indicators and Data Sets used in our strategies.

According to David Jameson, Founder of the Quantitative Investment Institute, "The sophistication and effectiveness of the ETFOptimize strategies is truly a breakthrough that could revolutionize investing. By incorporating multiple, key macroeconomic and measurements into the strategy engine, ETFOptimize has dramatically increased the accuracy of their trade signals. The result is precision and effectiveness that is groundbreaking."

The quantitative, weekly assessment of conditions by our strategies selects the optimum ETF(s) to hold at any given time while meeting each particular strategy's total return, risk-tolerance, and trading-activity objectives. Transactions take place infrequently, with an average of two to seven months between trades. ETFOptimize adds just the right amount of systematic activity to turn passive, index-based ETF portfolios into powerful performance machines that produce returns that are as much as 10-fold better than a buy-and-hold approach using those same ETFs.

Performance of the ETFOptimize Systematic Strategies

Returns for the ETFOptimize Strategies range from 15% to 35% average compounded growth per year with 100% of all years profitable (57 of 57 total years) across all strategies. On average, max drawdowns are reduced to less than 1/4th of what the overall market experiences across the span of a strategy's long-term performance (sinve inception). When a deep selloff or bear market begins, our systems have already rotated into cash or the optimum defensive ETF, thereby turning the tables and transforming every market downturn into an opportunity to add profits.

As an example of how well our strategies profit during downturns, our Asset Allocation: Optimal Equity and Fixed Income (4-ETF) Strategy (shown below) has never had a money-losing year and outperformed the market by 48.70% during 2008 (the worst year of the Financial Crisis). When a deep selloff or bear market begins (such as during the Financial Crisis), our trading systems detect the change of conditions early and have already rotated into the optimum defensive position, thereby turning the tables and transforming every market downturn into an opportunity for profits.

You can see from the chart below that our Asset Allocation: Equity/Fixed Income (4 ETF) Combination Strategy produced consistently steady gains that average 30% per year since its inception in 2006, regardless of how the underlying stock market was performing:


Asset Allocation: Equity-Fixed Income (4 ETF) Combo Strategy
Our Asset Allocation: Equity/Fixed Income (4 ETF) Combo Strategy has provided an average annual return of about 28% since inception.


Now you can put this fifth-generation, high-performance strategy to work for you! Click here to review the details of this and our other ETF-based investment strategies.


Strategy Performance During the Financial Crisis

One of the most desirable features of the ETFOptimize strategies is their exceptional performance during market selloffs. Each of our strategies has been designed to mitigate drawdowns as much as possible within the constraints of its approach – and, depending on the strategy, even produce positive returns by turning the tables on bear markets.

The reason that each strategy's approach constrains drawdowns is that some of our strategies (such as our Asset Allocation strategies) are designed to become more defensive and battle against losses by optimizing the defensive component when the market declines. Because of this, when equities are weak, the defensive ETF takes the lead and is responsible for mitigating losses – and depending on the strategy, even gaining ground as the market descends.

On the other hand, a strategy that is designed to achieve the highest possible return (such as our Optimal Equity Rotation Strategy), does not include a defensive component. The reason for this is that the fixed income component would moderate or even be a drag on the objective of maximum returns when conditions are bullish. For example, our Optimal Equity Rotation strategy garnered an astounding performance of 76% during 2017 – a time when the market was unmistakably in 'bull mode' with the S&P 500 gaining about 20%.

If the strategy had included defensive ETF's during 2017, they certainly would have reduced that exceptional 76% return from the optimal equity ETF's because in 2017. For example, our Optimal Fixed Income Rotation strategy gained just 16.78%. While this is a phenomenal return for investors who need a conservative, stable fixed-income strategy, it would've reduced the Optimal Equity Strategy return to about 46%.

As shown in the chart below, during the Financial Crisis (from January 2008 to November 2010), our Asset Allocation: Optimal Equity and Fixed Income (4-ETF) Strategy produced a 20% return. You can see that beginning in January 2008 the benchmark (blue line) began its deep selloff that lasted until March 2009, ultimately dropping -56%. It took until November 2010 for the S&P 500 to recover to the level where it stood in January 2008, i.e., a zero percent return for that period. In the meantime, this strategy produced a return of 100% – doubling the size of your portfolio – while someone invested in the S&P 500 ETF (SPY) was just breaking even after 2.8 years.


Asset Allocation: Equity-Fixed Income (4 ETF) Combo Strategy

During the Financial Crisis, our Asset Allocation: Equity/Fixed Income (4 ETF) Strategy produced a 95% return at a time when its benchmark (Equity / Fixed Income combination, blue line) was breaking-even over the course of three full years. See details.

Notice how the strategy (red line) steadily climbs higher without a significant profit-destroying drawdown, resulting in a total return that is more than 1,000% greater than the benchmark (S&P 500/Fixed Income combination) performance (blue line). The total return for the strategy during its lifetime from 2006 to present is 1,622.69%. During that time, the strategy turned every $100k invested into more than $1.6 million. The "Asset Allocation: Equity & Fixed Income (4 ETF) Combo Strategy" is just one example of the many choices in our suite of high-performance ETF Investment Strategies, ensuring there's an approach that is perfect for every investor's wealth-building objectives.

Put this fifth-generation, high-performance strategy to work for your investment account! Click here to review the details of this and our other ETF-based investment strategies.

Simple and Easy

We make it effortless for you to accumulate steady profits with ETF investing.  Considering the high performance and low drawdowns our strategies provide, why would an investor spend time incessantly seeking the slightest edge to try and beat the market using individual stocks? Or why would an investor allow a mutual fund manager to make repeated money-losing mistakes when you can sit back, relax and await the ETFOptimize signals – while getting much higher returns with much lower drawdowns in the process? By rotating between just a few ETFs a year with two-to-six months between trades, our subscribers are getting returns that on average, are more than TRIPLE the market's performance.

Our model strategies are particularly easy to use for non-professional investors because they hold just 1-4 positions at a time and don't rely on the rapid churning of trades to generate their outstanding performance. While each portfolio is updated and signals are automatically assessed each week to respond to changes in conditions rapidly, rotation of the ETF(s) held in the portfolios occur with an average of 2 to 7.3 months between trades (depending on the strategy). Each approach uses ETFs that are pre-screened for issuer stability and liquidity, allowing them to accommodate any size of a transaction or any size portfolio.

For example, our Asset Allocation: Equity/Fixed Income (4 ETF) Combo Strategy holds positions for an average of 106 days. That combination includes two Equity ETFs being held an average of 66 days (about 3.3 months) while holding the two Fixed Income ETFs an average of 146.75 days (approximately 7.34 months).

The low-cost, ETFOptimize Premium Strategy subscriptions provide you with detailed weekly updates for each strategy. Each strategy page is updated to show precisely the performance the model is achieving, combined with clear trade signals that provide details of which ETFs to buy or sell and when to make your trades to attain the highest returns from each trade.


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The ETFOptimize quantitative investment strategies have a proven track record of consistently high-performance success over long periods. Our premium model strategies have provided an average annual return of 30.53% since their inception – which is a multiple of more than quadruple (415%) the long-term annual return of the S&P 500, and more than eight times more than the index' return since 2000. The ETFOptimize strategies, collectively, have beaten the S&P 500 in 63 of 66 years (95.5%)!

The ETFOptimize strategies operate using our proprietary, quantitative financial-analysis programming that has been continuously upgraded and refined over the last 25 years, accompanied by high-speed computer servers and high-quality, point-in-time investment and economic databases. As ETFs were developed and became so incredibly popular, we've adapted our approach to embrace these instantly-diversified products.

Why not look over our strategy lineup now and see which one is the best fit for you? It's actually straightforward and affordable to put a high-performance investment strategy to work for you every week of the year. The ETFOptimize models are available by subscription starting at just $14/mo. (We even offer a Free strategy for those who would like a long-term trial before subscribing).

Look around the Internet; we don't think you'll find a superior approach to investing – offered at such an exceptionally low cost, and making consistent, high-performance investment results affordable for even the smallest investor. You keep your money in your account and follow our clear instructions for trades, which occur only about three times per year. We provide you with weekly updates of your strategy and an analysis of the market that always tells you what's critically important.

Plus, you can subscribe without risk because each model is backed by a 60-day, 100% Moneyback Guarantee if you decide that algorithmically based strategies are not your cup of tea. Our firm, Optimized Investments, Inc., has an A+ Rating with the Better Business Bureau and a perfect record of satisfied customers – no complaints – since the BBB began reviewing our firm, which was founded in 1998.

Take a moment to sign up for the strategy of your choice now – while all the benefits of a quantitative approach are fresh in your mind. You can get started for less than 50-cents a day with a very low-risk, high-profit investment strategy that produces solid performance through thick and thin – in any type of market environment.

Moreover, remember that you have nothing to lose – if you change your mind anytime in the first two months – for any reason (or no reason at all) – just let us know and we'll return every penny you paid! Visit our ETF Investment Strategy Suite today and select the quantitative strategy that's perfect for you:

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