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Optimal Equity & Fixed Income (4 ETF) Combo Strategy


 

This Strategy Profile page provides you with an information-rich introduction to our Equity/Fixed Income Combo (4 ETF) Strategy  (aka, "Equity/Fixed-4" for short) and documentation of its many features and benefits.

Below you'll find data and charts of the strategy's historical and recent performance, its robust performance during the Financial Crisis, details of its high Risk-Adjusted Return, the makeup of the universe of ETFs from which it chooses, a description of the many significant benefits that accrue to an investor consistently using this strategy's guidance.


Paid subscribers additionally receive details on all Current Positions held, prompt and accurate notice of Position Changes, Transaction documentation, comprehensive Statistics for each holding, Closed Position performance documentation, and a comprehensive set of related performance charts, all updated each weekend. If you would like to see the complete Premium Strategy details that are not provided by this page, you may subscribe with the confidence of knowing you have a 60-day, 100% money-back guarantee if you choose to discontinue your subscription for any reason. We also offer a free sample of an with our S&P 500 Conservative Strategy

If you have any questions about this – or any of our other strategies, please contact us for prompt assistance.

You can gain access to the Premium Strategy page by clicking this link or any of the blue links throughout the page below for instant access to the current ETFs being held by the strategy, all historical trades, related news, and a multitude of actionable details. Why not put this strategy's consistently climbing performance – providing positive returns in any economic or market environment – to work for you today?

*Past performance is not necessarily indicative of future returns

 


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1) Performance Since Inception

2) Strategy Description

3) Key Statistics Summary

4) The Fixed Income Component

5) Strategy Performance During the Financial Crisis

6) Year-by-Year Performance Detail

7) Risk Measurements

8) Strategy Universes

9) Unique Benefits of This Strategy

10) Your Subscription Includes...

11) 100% Money-Back Guarantee

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The information on this page was most recently updated on:

Sunday, September 15, 2019

Strategies are updated each week by 12-noon (EST) on Sunday. We will announce any unexpected delays.
Trades should be filled at mid-day on Monday (Tuesday if Monday is a holiday).
Prices on new trades are now updated in the evening after a trade (usually on Mondays) to the
average of the day's high, low and 2x the closing price.




Optimal Equity & Fixed Income (2 Asset, 4 ETF) Combo Strategy

Smooth, steadily climbing performance: As you can see from the charts below, the Optimal Equity & Fixed Income (4 ETF) Combo Strategy provides a steady and consistent upward climb in its equity curve without a significant drawdown. The charts shown below cover date ranges from Inception-to-present, 2-Years, 12-Months, and Year-to-Date. Notice that for this model, the performance steadily increases the closer the we get to the present day.

With an Annualized Return of 29% since Inception, the performance is exceptionally good for any investment approach, but when you consider that this model has an Annualized Return near 50% for both the last 2 Years and the last 12 Months, and also an Annualized Return of 54% for the Year-to-Date (YTD), this model's performance is even more impressive.

As the market has flattened and floundered since February 2018, the Equity/FI-4 Strategy has continued to pick up steam
and even
increased its returns – by 86%!

The Optimal Equity/Fixed (4 ETF) Strategy's performance is shown by the red line, while the benchmark, a 70%-30% weighted, S&P 500 ETF (SPY) & Total Bond Market ETF (BND) Combo is shown by the blue line.




Performance Chart – Since Inception
(July 1, 2006 - Present)

The Equity-Fixed (4 ETF) Combo Strategy has an Annualized Return of 29% from its inception-to-present with an avg. Max Drawdown of -11%. The strategy has produced profits every year since inception, and during the Financial Crisis through 2013, this model produced a 215% return while its benchmark (a SPY/BND combo) worked all that time just to get back to breakeven.

Optimal Equity & Fixed Income (2 Asset, 4 ETF) Combo – Inception Chart


KEY: The blue line shown is the benchmark: a 70%-30% weighted, buy-and-hold of the S&P 500 ETF (SPY)/ and Total Bond Market ETF (BND).
The red line shows the "Optimal Equity/Fixed Income (4 ETF) Combo Strategy's" performance. 

 




The Equity-Fixed (4 ETF) Strategy has Total Return of 98%  for the last two years with a Max Drawdown of only -8%. Meanwhile, the stock market has been in a sidways pattern and has gained very little over the same period. This strategy has produced a performance that's 5-times (500%) the performance of its benchmark (70%-30% using S&P 500 ETF/All Bonds ETF - SPY/BND).

Optimal Equity & Fixed Income (4 ETF) Combo Strategy – 2 Year Chart


KEY: The blue line shown is the benchmark: a 70%-30% weighted, buy-and-hold of the S&P 500 ETF (SPY)/ and Total Bond Market ETF (BND).
The red line shows the "Optimal Equity/Fixed Income (4 ETF) Combo Strategy's" performance. 

 



In the last 12 months, this strategy has produced a performance of 48% while the S&P 500 ETF (SPY)
has struggled to break even with a gain of just 1.03% (so, an outperformance of 46-times the market).

Optimal Equity & Fixed Income (4 ETF) Combo Strategy – 12 Month Chart

 

 

Optimal Equity & Fixed Income (2 Asset, 4 ETF) Combo Strategy


As of August 31, 2019

Since the start of 2019, stocks have struggled from the uncertainty of the trade war with China that could potentially have a very long-term – or even a generational – effect. In August 2019, bond interest rates and an inverted yield curve are predicting that a severe recession approaches. However, the ETFOptimize Optimal Equity/Fixed Income (4 ETF) Strategy has produced a return of 53.74% (Annualized Return of 96.15%) with a Max Drawdown of only -2.97% and an amazing Sharpe Ratio of 3.49 since the beginning of 2019.

Click here to subscribe to this strategy today and begin getting this exceptional return for yourself!

Optimal Equity & Fixed Income (4 ETF) Combo Strategy – YTD Chart


KEY: The blue line shown is the benchmark: a 70%-30% weighted, buy-and-hold of the S&P 500 ETF (SPY)/ and Total Bond Market ETF (BND).
The red line shows the "Optimal Equity/Fixed Income (4 ETF) Combo Strategy's" performance. 


Fixed Income Component

The Fixed Income (2 ETF) Strategy component, when analyzed separately, produces an Annualized Return of about 12% with a Maximum Drawdown of only -10%. The strategy also has an average dividend of more than 4% per year, which is quite healthy compared to investor's alternatives, which have continuously been driven lower by ever-declining interest rates. You can see from the chart below that the Fixed Income (2 ETF) component of this 4-ETF strategy contributes a nearly straight-line, upward-sloping performance curve with no significant drawdowns. There were only two significant drawdowns since inception in 2006, and only one – in mid-2009 slightly crossed the -10% threshold (see the lower window of the chart below).

 Fixed Income strategy Performance


KEY:
The blue line shown as the benchmark is a buy-and-hold of the Vanguard Total Bond Market ETF (BND).
The red line represents the Fixed Income (2 ETF, 30% weighting) component of our EQ/FI+ (4 ETF) Strategy provides a steady, upward performance that
protects investors during short-term corrections as well as prolonged bear markets. The worst drawdown since inception is only about -10%.

 


The advantage of combining two uncorrelated asset classes (Equity and Fixed Income ETFs) is that you benefit from a significant reduction of volatility with only slightly lower performance, resulting in a dramatically increased Risk-Adjusted Return. This strategy provides the highest Sharpe Ratio (a measure of Risk-Adjusted Return) of all our strategies, at 1.59. Its Sortino Ratio is a whopping 2.29. A high Risk-Adjusted Return implies an excellent performance combined with low volatility – the proverbial holy grail of investing.

With a compound annual growth rate of about 27%, this two-asset-class, 4-ETF combination strategy nearly quadruples (387%-times) the average return of the benchmark (a 70%-30, buy-and-hold of an S&P 500 ETF /Total Bond Market ETF combo - SPY/BND), and according to data provided by Morningstar (an independent source of information and tracking of mutual fund performance), outperforms 100% of mutual funds in the last 3, 5, and 10 years.  Also, since inception on July 1, 2006, this strategy has outperformed its benchmark every year since inception and has never experienced a money-losing year.*

 

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Optimal Equity & Fixed Income (2 Asset, 4 ETF) Combo Strategy


Strategy Description


Our "Optimal Equity & Fixed-Income (2 Asset, 4 ETF) Combination Strategy" is a long-only strategy that holds a combination of the two optimum ETFs from each of two uncorrelated asset classes – Equity and Fixed Income - for a total of four positions held simultaneously in a 70%-30% ratio (majority weighting placed on Equity ETFs).

The Equity System Component selects the optimum two ETFs from of a universe of about 1,407 Equity ETFs, including 10 ETFs that are 2x-leveraged versions of widely-used indices, such as the S&P 500, Dow Industrials, and NASDAQ 100 – which are utilized during long, robust bull markets when underlying economic and market conditions are exceptionally favorable (there are no 3x-leveraged ETFs or inverse ETFs used in this strategy).

 

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Likewise, the Fixed Income System Component selects two ETFs from a universe of 53 carefully selected bond and other fixed-income ETFs. (See below for details on these two Universes. The Fixed Income assets are always present to mitigate market corrections or downturns.)

Holding the optimum positions from two uncorrelated asset classes provides more diversification, less volatility, and a smoother equity curve than strategies with fewer holdings – with a significant increase in the strategy's Risk-Adjusted Return (RAR). This model has the highest RAR of all our strategies, with a Sortino Ratio of 2.29 and a Sharpe Ratio of 1.60 – and achieves impressive, long-term performance that averages more than quadruple (410%) the 20-year return of the S&P 500.*

May 26, 2019 Revision - This revision provides the selection of the optimum 4 ETFs at any time, now from two combined universes (Equity and Fixed Income) with a total of 1,458 ETFs (vs. 265 previously) and a significantly improved set of selection algorithms. The Equity/Fixed Income (4 ETF) Strategy combines two Equity (70% weighting) and two Fixed Income (30% weighting) ETFs, and now takes seasonal volatility into consideration during the summer months and during the month of October.

This added sensitivity to market risk during historically volatile times of the year can move the Equity-ETF portion of the model into conservative Equity ETFs (XLP, XLU, etc.), Cash-Proxy ETFs (SHY, BIL, etc.) and even Fixed Income ETFs – depending on the strategy's assessment of conditions. So, it is possible that during some portion of some years, this model may be holding four Fixed Income ETFs and no Equity ETFs. However, being dynamically adjustable, this very conservative approach is only employed when it produces much higher returns – such as the summer of 2019.

The result of these revisions is significantly increased performance, reduced drawdowns, and our highest Risk-Adjusted Return, with a Sortino ratio of 2.49 since inception and 3.37 in the last 3 years (compared to 2.05 and 2.34, respectively, for the previous version of this model). To put the Risk-Adjusted Returns of this strategy in perspective, the S&P 500 ETF/Total Bond Market (SPY/BND) benchmark has a Sortino Ratio of 0.92 since inception and 1.50 in the last three years.

 

Optimal Equity & Fixed Income (2 Asset, 4 ETF) Combo Strategy



Data sources: Yearly Performance Statistics, Portfolio123, Standard & Poors Global Market Intelligence, Compustat,
S&P Capital IQ, St. Louis Federal Reserve. Most recent update: August 2019 (statistical averages are updated every 3-6 months).


Inception: July 1, 2006
Rebalance Frequency: Weekly
Average Position Hold Time: 128.5 market sessions (about 6.42 months)

(i.e., avg. of 43 days for the 2 Equity/FI ETF holdings and 214 days for the 2 Fixed Income ETF holdings)
Weighting: 4-ETF Combination ( 70% in 2 Equity++ ETFs, and 30% in 2 Fixed Income ETFs)
Nearest  Benchmark: 70% Equity ETF (SPY) / 30% Total Bond Market ETF (BND) Combination


(NOTE: the Fixed Income components of the Equity++ (2 ETF) Strategy and the Fixed Income (2 ETF) Strategy are different ETFs and very different algorithms to assess market conditions and select holdings. The Equity++ model used for 70% of this strategy offers subscribers a different set of Equity-based ETFs than the two ETFs provided by our subscription Equity+ Strategy.)

PERFORMANCE*
Annualized Return (since inception): 29.27%
Last 12 Month's Return: 49.53% (5.64% for 70/30, Equity/Fixed Income benchmark)
Last Year's (2018) Return: 23.24%
(-3.34% for 70/30, Equity/Fixed Income benchmark)
Last 3 Year's Return: 154.94% (vs. 30.83% for 70/30, Equity/Fixed Income benchmark)
STRATEGY Total Return since Inception: 2,371.72% (29.21% Annualized Return)
BENCHMARK (70/30 combo of Equity/Bond ETFs) Total Return since Inception: 127.98%
Financial Crisis & Recovery Return: 286.27% (see "Financial Crisis Performance' below)
Percentage of Winning Trades: 67.64%
Biggest Winner, Biggest Loser: 40.11%, -30.34%
Winning Trades Held for: 127.5 Market Sessions (about 6.4 months)
Losing Trades Held for:  36.95 Market Sessions(about 1.8 months)
*Past performance is not necessarily indicative of future returns.

RISK MEASURES
Number of Money-Losing Years:  ZERO (0%) of 16 Years
Number of Years Outperforming the Benchmark: 13 of 13.5
Strategy's Avg. Max Drawdown (AAMDD): -11.28%**
Strategy's absolute Max Drawdown (MDD): -16.24% (in 2016)
Last Year's (2018) Max Drawdown: -8.75%
Benchmark's Max Drawdown (since inception): -55.19% (in 2008-2009)
Standard Deviation: 15.26%
Annualized Alpha: 23.32%

RISK-ADJUSTED RETURN (Higher is better)
Sharpe Ratio - Since Inception: 1.67  (Compare to Benchmark at 0.71)
Sharpe Ratio - Last 3 Yrs: 2.15  (Compare to Benchmark at 1.21)
Sortino Ratio - Since Inception: 2.53  (Compare to Benchmark at 0.94)
Sortino Ratio - Last 3 Yrs: 3.40 (Compare to Benchmark at 1.23)

(Our abbreviated name for this strategy is "Equity/Fixed Income-4" or "EQ/FI-4")

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*Past performance is not necessarily indicative of future returns. **Average Annual Max Drawdown (AAMDD) is the average of the deepest drawdowns each year since inception, which is the best representation of the worst peak-to-trough decline you may experience in any given year.



 




 

Optimal Equity & Fixed Income (2 Asset, 4 ETF) Combo Strategy

 




Turning Market Losses Into Your Gains

Outperformance is nothing if it isn't accompanied by downside protection when the market begins to slide. After all, who wants a really aggressive investment that produces an excellent performance when stocks are rising – but loses it all (and perhaps more) when conditions turn negative? Fortunately, both of the components of this strategy provide ample protection from a loss when the market is declining. Neither the S&P 500 component nor the Fixed Income component has ever lost money during any year when operated separately and they provide an even more robust investment approach when combined into this Equity/Fixed Income, 2-Asset, 4-ETF strategy.

When challenging economic or market conditions arise that cause the typical stock portfolio or mutual fund to go into decline, this strategy's Equity-based component will switch to a 'risk-off' mode – selling positions and holding cash. Meanwhile, the Fixed Income component is always rotating to the two Fixed Income ETFs that are optimum for conditions.

The conservative, two-ETF, Fixed Income component of this 4-ETF strategy consists primarily of bond-based ETFs (corporate, municipal, Treasury), and provide an asset class that is inversely correlated (~0.25) to the two-ETF Equity Component. This combination significantly reduces systematic (market-related) risk, and subscribers also receive elimination of the individual-company risk that investors inherently avoid through our model's use of Exchange Traded Funds (ETFs).

The two Fixed Income ETFs are always active in this strategy, with a weighting of 30%, and therefore are providing continuous protection for the portfolio, reducing short-term declines during the typical -10% to -15% corrections (which occur an average of about three times a year) and producing a significant return during prolonged bear markets.

The Fixed Income (2 ETF) Strategy – standing alone – produces an Annualized Return of about 12% with a Maximum Drawdown of only -9%. The strategy also has an average dividend of more than 4% per year, which is quite healthy compared to investor's alternatives, which have continuously been driven lower by ever-declining interest rates.

The chart below shows that if we isolate the Fixed Income (2 ETF) component of this 4-ETF strategy, it contributes a nearly straight-line, upward-sloping performance curve with no significant drawdowns. There were only two drawdowns since inception in 2006, and only one – in mid-2009 slightly crossed the -10% threshold (see the lower window of the chart below).



Fixed Income (2 ETF) Component of this Strategy

 Fixed Income strategy Performance


KEY:
The blue line shown as the benchmark is a buy-and-hold of the Vanguard Total Bond Market ETF (BND).
The red line represents the Fixed Income (2 ETF) component of our EQ/FI+ (4 ETF) Strategy providing nearly straight-line upward performance that
protects investors during short-term corrections as well as prolonged bear markets. The worst drawdown since inception is only slightly more than -10%.

 

In the next section you'll see that when the Financial Crisis took place – an 18-month period that wrecked the lives of tens of millions of investors across the world – the AA-2-4 Strategy did not decline at all, and instead transformed the crisis into a money-making opportunity!

 



Optimal Equity & Fixed Income (2 Asset, 4 ETF) Combo Strategy


Financial Crisis Performance

To demonstrate how this strategy minimizes risk and transforms market losses into your portfolio gains, the best example we can provide is during the Financial Crisis, when the S&P 500 plummeted from late 2007, through all of 2008, and into the first quarter of 2009, losing -56% of its value. During this same period, our Equity/Fixed Income-4 Strategy's nearest benchmark, a 70%-30% Equity ETF/Total Bond Market ETF combination (SPY/BND) lost -40% – less than the S&P 500 (-56%) because it is a combination of two uncorrelated asset classes (an advantage our Equity/Fixed Income-4 Strategy also puts to use). Meanwhile, the ETFOptimize Equity/Fixed Income-4 Strategy consistently switched to the four optimum ETFs (two Equity and two Fixed Income ETFs) for all conditions and outperformed its benchmark by huge margins.

This story is best demonstrated by the two charts below:

The Left Chart below presents the 2007 High to the Financial Crisis Low.  These developments began at the October 9, 2007 market high just before the downturn began, until the lowest point – at the Financial Crisis trough on March 9, 2009. Our strategy signaled for the long-equity components to sell just before the downturn began and the Fixed Income components took over, producing a slight, but steady return of 5.3% and an outperformance of 60.3% through the worst of the Financial Crisis selloff – its trough on March 9, 2009.

The Right Chart below shows the entirety of the  wild tale – from the Beginning of the Financial Crisis through the Recoveryfor five long years until January 18, 2011 – when the benchmark finally recovered the -40% loss it suffered during the worst recession in 75 years. By the time the SPY/BND 70-30 benchmark gets back to breakeven (0%) after four long years, our Optimal Equity/ Fixed Income (4 ETF) Strategy had produced a return of 300% for subscribers.

 

The Financial Crisis wiped out half of American's wealth, while this strategy didn't lose a single dollar

 Financial Prices stats
  Financial Crisis and Recovery, 215% vs. 0%

 Financial Crisis and Recovery stats


2007 High to Financial Crisis Bottom – From the October 2007 high just before the Financial Crisis began to its low on March 9, 2009, this strategy's benchmark, a 70/30-weighted S&P 500/Total Bond Market ETF (SPY/BND) Combination lost -39.63%. This benchmark lost less than the S&P 500 (-56%) because of its combination of two uncorrelated asset classes (the same combination as our strategy). However, just before the crisis began, the equity component of our Optimal Equity/ Fixed Income (4 ETF) Combo Strategy moved to a cash position, while the Fixed Income component gained a bit for a return of + 5.31% - which is a 45% outperformance of the benchmark.


 

Financial Crisis & Recovery – The strategy's benchmark (a 70/30-weighted SPY/BND combination) descended from its October 2007 high (just before the Financial Crisis) through its low on March 9, 2009, and lost -40%. Then, as shown in the chart above, the benchmark began to gain ground and over a total of 37.5 months (until January 2011), it finally recovered that -40% loss. However, during that same period, our Optimal Equity/ Fixed Income (4 ETF) Combo Strategy produced a total return of 215% and an Annuallized Return of 25% – not losing a dime through the entire ordeal.  Which investment approach do you think will serve you better when the next severe market collapse begins?

 

Eliminating significant market declines – and the recovery time required – is one of several ways this ETFOptimize strategy produces considerable outperformance. However, it is also generating substantial outperformance in all other types of market conditions. During long, bull rallies, which constitute about 60%-70% of the market's time, this strategy is usually holding the 2x-leveraged S&P 500-based ETF (SSO), combined with the optimal fixed-income ETF, which produces a very steady equity curve and allows users to ignore the market and live stress-free.


Get Protection from Market Losses

OR...

 

Make Downturns Profitable!

 



Optimal Equity & Fixed Income (2 Asset, 4 ETF) Combo Strategy

As millions of investors and their advisors become concerned about changing economic indicators or the latest threatening headline, not knowing what the future holds, subscribers to the Optimal Equity/ Fixed Income (4 ETF) Strategy can sit back and just ignore all that noise. The AA-2-4 strategy assesses as many as 28 different data sets of factors that drive the performance of stocks each weekend to determine the optimum ETFs to own for any type of economic and market condition.

OurOptimal Equity/ Fixed Income (4 ETF) Strategy has provided subscribers with profits every single year since inception, regardless of the performance of the economy or the stock market. This may be the most impressive benefit of all for those who lived through the Financial Crisis of 2008-2009 and lost a substantial amount of money (or felt the intense stress of a potential loss): i.e., the AA-2-4 Strategy has never experienced a money-losing year!  Furthermore, the strategy has outperformed its benchmark every single year since inception.

The tables below provide both a numeric and a graphic presentation of the annual performance of the AA-2-4 Strategy since its inception in 2006.

The 'Performance by Calendar Year' table below shows the following data...

• This Model's annual performance on the top line,
• The Benchmark's performance on the middle line, and the
• The 'Excess' performance or outperformance of the Equity/Fixed Income-4 Strategy over its Benchmark on the bottom line.



Calendar Year Performance Statistics


Never a Money-Losing Year

From the top line, you can see that the Equity/Fixed Income+ (4 ETF) strategy provided healthy, positive annual returns in each calendar year since its inception in mid-2006 with an average return of about 27%. The bottom line shows that the EQ/FI-4 strategy also outperformed its benchmark every year since its inception (with an average outperformance of more than 20% per year), with the exception of the partial year in 2006.

The 'Yearly Returns' bar chart below shows a graphical interpretation of the data above. Notice from the strategy's performance bars (red) that it has been profitable every year (indicated by all red bars being above 0%), and in every year, the strategy (red bars) outperformed its benchmark (indicated by red bars being above the blue bars), most years significantly. 2018 is turning out to be a difficult year for stocks, and especially for the S&P 500, since large- cap stocks had outperformed for several years prior. Yet, 2018 is still underway, and we're confident that, by the end of the year, this strategy will show the same profitability and outperformance characteristics as all the prior years.



Annual Performance Bar Chart
The Optimal Equity/ Fixed Income (4 ETF) Strategy's annual performance is shown by red bars and its benchmark return is shown by blue bars.

 

The outperformance was small in 2006, but very significant in 2015 (30.09% outperformance), 2017 (33.86% outperformance), and in 2010, when the strategy produced a gain of 73.63%, which was 60.85% more than the S&P 500/Total Bond Market benchmark. Again, this chart shows that 2018, so far, has provided a fairly anemic performance. Best because stocks have been mostly sideways throughout the first half of the year. However, animal spirits are building and with corporate at record-setting levels, we expect this strategy to continue to gain ground in the year's second half.

 

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Optimal Equity & Fixed Income (2 Asset, 4 ETF) Combo Strategy

Risk Measurements

One of the most important criteria for selecting any investment approach is its 'Risk-Adjusted Return,' which is usually assessed by the Sharpe Ratio and the Sortino Ratio measures. These two metrics show the ratio of an investment's performance compared to to its volatility (which is called its 'risk' in the investment world). Notice in the table below the dramatic outperformance of this strategy when those two ratios are compared to the strategy's benchmark - a buy-and-hold approach with the widely used 70-30% weighted S&P 500 /Total Bond (SPY/BND) ETF combo.

Since the inception of this strategy in 2006, the Sharpe Ratio (or "risk-adjusted return") of the SPY/BND benchmark is 0.71 (bottom section, right side) – compared to a Sharpe ratio for this strategy that is more than double that amount. For perspective, most “good” investments produce long-term annualized Sharpe ratios that fall between 0.5 and 1.0, and the S&P 500's long-term Sharpe ratio is about 0.40. Even more impressive is this strategy's Sortino ratio (i.e., return divided by downside volatility only), which is more than 2.00 since inception, compared to the benchmark's Sortino ratio of just 0.92. For reference, the S&P 500's long-term Sortino Ratio is 0.76.


Risk Measurements

 

You can also see from the last entry at the bottom of the table showing Alpha % that this strategy outperforms its market benchmark by an average of about 20% per year. Compare this to Warren Buffett (with a net worth of more than $80 billion and one of the wealthiest men on the planet, is considered to be the world's most successful investor of all time), who has attained a long-term Alpha of 9.86%. So you'll legitimately be able to say you are outperforming Warren Buffett for as long as you stick with this strategy!

*Note: All figures quoted above are based on their status at the time this section was written. While the numbers will change slightly week to week, the overall thrust of the text remains accurate – this strategy has a very high absolute performance very high risk-adjusted-return.


 

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Optimal Equity & Fixed Income (2 Asset, 4 ETF) Combo Strategy

Strategy Universes

This two-component, combination strategy combines our Equity++ (2 ETF) Strategy and our Fixed Income (2-ETF) Strategy, in a weighting of 70%-30%, respectively. (Sorry, neither of these models are available as a stand-alone subscription.)

Each of the two asset-class components has a separate universe with 1,458 ETFs in the Equity universe and 53 ETFs in the Fixed-Income universe.

Some subscribers wonder if the ETFs we use have enough trading volume to accommodate their investment dollars when added to the funds from our other subscribers and the regular volume of an ETF in a typical trading day. Bottom Line: YES.

That said, ETF trading volume is not comparable to the trading volume of stocks, and ETFs and individual corporate stocks are two entirely different animals. For example, when a recommendation is made to a large number of subscribers using a small-capitalization stock newsletter, all that volume in one direction can move the price of that small company's shares. However, that's not the case with Exchange Traded Funds (ETFs).

Here's the difference: Publicly-traded corporations authorize a specific number of shares to be issued (the float) at any given time, and shareholders must approve the issuance of any new shares (to avoid dilution of existing shares). Meanwhile, ETFs are investment vehicles structured so that shares can be added or redeemed by well-regulated institutional intermediaries without affecting the price of the ETF. These intermediaries serve an arbitrage role to keep the value of the ETF aligned with the underlying value of the stocks owned by the ETF.

Each ETF we use has been carefully screened to ensure that the underlying stocksin its basis index can accommodate the robust volume that may accompany a low-cost, high-volume subscription service such as ETFOptimize. The ETFs used in our models should be able to accommodate individual investors with personal portfolios of $50 million or more, in addition to thousands of other investors with smaller portfolios. If you run into any problems in making a trade based on an ETF your strategy recommends, please contact us to let us know so we can resolve the issue.

Each ETF is also rated 5 of 5 by FactSet for the ease of investing $1 million in a single trade. If you are investing more than $50 million in a single trade recommended by our models, or if you are an investment advisor with assets averaging more than $50 million per client, please contact us for additional suggestions on the best ways to accomodate your needs.

EQUITY ETF UNIVERSE COMPONENTS

The Equity-Rotation algorithms select the optimum two positions for conditions from a 1096-ETF Universe of Long Equity ETFs and a 11-ETF Universe of Leveraged-Long Equity ETFs to comprise a total 206-Asset, Equity-ETF universe. The ETFs in each universe are identified, along with their yield, by clicking the links above to open the individual universe PDF tables.

Are you concerned about potentially low daily trading volume for some of the ETFs listed in this strategy's universe? You shouldn't be – ETFs are completely different animal than stocks and daily trading volume does not have the same relevance as it does for stocks. Learn more about ETF trading volume and liquidity considerations.


FIXED INCOME COMPONENT

The Fixed Income Rotation algorithms select the optimum position for conditions from a 53-ETF Fixed Income Universe consisting of Corporate Bond ETFs, Treasury Bond ETFs, and other fixed-income-based ETF asset configurations. The 53 fixed-income ETFs in the universe are identified, along with their dividends, in this table.

Are you concerned about potentially low daily trading volume for some of the ETFs listed in this Fixed-Income strategy's universe? You shouldn't be – ETFs are completely different animal than stocks and daily trading volume does not have the same relevance as it does for stocks. Learn more about ETF trading volume and liquidity considerations.

An Investing Breakthrough


 



Optimal Equity & Fixed Income (2 Asset, 4 ETF) Combo Strategy

Benefits of This Strategy


Consider the Impressive Advantages that Accompany This Strategy...

STEADY PROFITS:  By combining two ETFs, one from each of two uncorrelated asset classes, this strategy features low-volatility, upside performance regardless of market conditions, and steady profits. The bond component always moderates the day-to-day volatility of the portfolio, especially when leveraged Equity ETFs are being utilized. With an annual return of nearly 30% and an incredibly high Risk-Adjusted Return at 2.29 (Sortino ratio), the Optimal Equity/ Fixed Income (4 ETF) Strategy rewards users with continuously positive returns without significant declines – and users may never incur a money-losing year. If there is a 12-month span that is down, it will likely only be by one to three percent.

The Risk-Adjusted Return (RAR) shown by the strategy's Sortino Ratio at 2.29 since inception is the highest of all our strategies. We generally use the Sortino Ratio as our go-to measure for RAR, because it measures the ratio of a model's overall appreciation to its downside volatility – which is the risk factor about which nearly all investors are actually concerned. In contrast, the Sharpe ratio measures performance against all volatility, and in our opinion, is a less applicable indicator of RAR. Nevertheless, our strategy's Sharpe ratios are also exceptionally high.

ROBUST GAINS DURING BOTH RALLIES AND DOWNTURNS:  The combination of two uncorrelated asset-class ETFs – i.e., the optimum selection from a universe of four S&P 500 ETFs and an always-optimum selection from a 53-ETF Fixed Income universe – provides you with performance that is double the return of the market during bull rallies, while producing gains during market downturns, and provide an ever-present protection against corrections and short-term pullbacks from the fixed income component.

When significant market declines occur, this strategy offers a powerful defense that doubles as a high-return offense. If a severe, extended decline begins because of an economic contraction, your strategy will automatically switch to the appropriate inverse S&P 500 ETF and combine that aggressive position with the optimal, conservative Fixed Income ETF that moderates out any excessive turbulence. The AA-2-4 Strategy makes money no matter which direction the market is headed – always in a smooth, upward trajectory.

UNEMOTIONAL, EFFICIENT INVESTMENT DECISIONS:  using a stoic, mathematically driven trading system enables you to ignore the financial media, with its click-bait pessimistic market outlooks, coffee-fueled TV shysters, and hype-reliant internet shysters who attempt to lure you into their capricious agendas that surreptitiously hijack your wallet. Instead, your weekly ETFOptimize Strategy Update will quietly provide you with the accurate intelligence you need, with detailed documentation of trades when they occur, details of your strategy's performance for the last week, month, and year, and a comprehensive set of statistics so you can quickly check your progress toward achieving your financial goals. Subscribers can sleep soundly know that their strategy is always selecting the optimum positions for conditions and perhaps most advantageous of all – knowing that by design, there is virtually no risk of losing money in any given year.

EASY TO USE:   The ETFOptimize investment strategies seek to minimize the number of trades needed to attain their high performance, and on average, have 3.83 months between trades. For this strategy (Equity/Fixed Income-4), the average hold time is 106 business days or about 5.3 months (Equity ETFs are held 3.22 months and Fixed Income ETFs are 6.54 months, on average). When a transaction occurs, you receive straightforward recommendations that you can quickly execute with the click of a button at your broker's website. For investors who want to become familiar with each position, we provide a link to complete background data and relevant news for each ETF selected for use by the strategy.

The ETFOptimize strategies are unquestionably a breakthrough in the investment world – providing what legitimately may be the easiest way to attain substantial wealth through consistent compounding – with minimal risk. For investors, they can be the "Holy Grail" – a simple, proven investment approach that significantly gains ground through both bull markets and bear markets alike.

 

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Optimal Equity & Fixed Income (2 Asset, 4 ETF) Combo Strategy

Your Subscription Includes...


1) High-Performance Model w/ Weekly Updates – 
By Noon every Sunday, your Premium Strategy Page is updated with your model's freshly revised details, including details of any New Transactions, updated prices and performance for current holdings, past transaction documentation, current and historical performance charts, and complete trade and risk statistics. Having the latest performance information keeps you abreast of the profits you're accumulating toward achieving your financial goals!  And you'll get much more...



2) Strategy Trade Alerts  –  With each weekly update you will receive a Strategy Update Summary email with any Strategy Trade Notices for that week, including the complete details of any trades recommended by your quantitative model, including links from each of your

 


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model's current holdings to historical prices, a wide variety of statistics, charts, and news related to that ETF and its industry. We recommend that you fill ETF transactions in the middle of the following day (Monday – or Tuesday if Monday is a holiday). Note: Across our strategies, the average trade hold time is about 2 months, so trades are relatively rare events, but those few trades are enough to make a world of difference!


3) 'Quick Look' Report  –  Each Sunday evening, your Strategy Update Summary email will include the link to our latest fact-filled "Quick Look" report that provides you with an Executive Summary of the factors and events most likely to affect investment prices in the coming week. This includes the current status of economic data, critical technical support and resistance levels, substantive changes to fundamental indicators, scheduled news events and announcements that are sure to have an outsized effect on stock and bond prices. With your weekly Quick Look report, you'll gain insights into little-known factors affecting your investments, and you'll know beforehand what to expect in the week ahead.


4) 'Insights™ - Proprietary Signal Analysis'   Premium-strategy subscribers get first access to our award-winning Insights™ data-driven market reports as soon as they are posted – well ahead of the general public and media outlets that cover us. Since 1998, thousands of individual investors and advisors have come to depend on the premium quantitative assessment in our market reports, and you'll get that information days before non-subscribers or media outlets have an opportunity for access. Discover ETFOptimize Insights™ our proprietary indicators can reveal about macroeconomic measures, fundamental stock factors, market-internal breadth indicators, and sophisticated technical signals – always accompanied by clear explanations and charts.


5) 'Inside Secrets of Investing' Blog – When we post a timely analysis or news-worth article to our Inside Secrets of Investing Blog, premium-strategy subscribers get the first available access to that valuable information another section of the site where it's publicly available. The 'Inside Secrets of Investing' blog features a wide variety of resources, from equity, fixed income, and sector analysis, to macroeconomic and fundamental analysis, ETF-related subjects, evergreen investment articles, and experienced-insider tips that help you attain phenomenal investment performance.


6) Perhaps Most Importantly – You'll get the potentially life-changing benefit of consistent and exceptional compound growth of your investment dollars without the stress and corrosive worry about a potential loss of your capital that accompanies most other investment approaches. The ETFOptimize models reduce the average annual Drawdowns (peak-to-trough decline) you'll experience to only -11%, – while the S&P 500 has been down as much as -56% since 2000! The ETFOptimize strategies maximize performance by minimizing drawdowns – as well as selecting the optimum ETF for each approach during bull markets. As a result, long-term ETFOptimize investors can expect to attain asset growth that is, on average, five-times the growth of a buy-and-hold of the S&P 500 ETF (SPY).

With an average Sharpe ratio of 1.50 and an average Sortino Ratio of 2.21, the ETFOptimize strategies consistently rank atop the lists of the highest risk-adjusted return of any mutual fund, professionally managed portfolio, or quantitative investment models of which we are aware.

 

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60-day Money-Back Guarantee  – Your strategy subscription is backed by a 60-day, 100% No-Risk Guarantee. We guarantee that you'll be thrilled with the results you get, or just let us know within the first 60 days and we'll promptly refund every penny that you paid. No questions asked!

This airtight, written protection is your iron-clad assurance that you can thoroughly explore your ETFOptimize investment strategies and password-protected subscriber content for a full two months – ample time to discover just how exceptional this product is – with real-time experience – while you incur NO risk whatsoever.


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We are so confident you'll be absolutely thrilled with the performance of your ETFOptimize investment strategy that we back your subscription with a 60-day, 100% Money-Back Guarantee. If you're not entirely delighted for any reason – or no reason at all – in the first two months, just let us know, and we'll promptly refund every penny you've paid.

Since 2004, Optimized Investments, Inc. has held an A+ Rating with the Better Business Bureau and has never had a single complaint since the company's launch in 1998. Our corporate mission is to create a tremendous group of enthusiastic customer-advocates who consistently achieve their wealth-building goals using the ETFOptimize investment strategies. Why not join the thousands who have already taken advantage of these unique strategies? You have zero risk – the burden is entirely on us to provide you with the performance, features, and benefits discussed on this page.


Optimal Equity & Fixed Income (2 Asset, 4 ETF) Combo Strategy

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DISCLAIMER
All content herein is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor should it be interpreted as a recommendation to buy, hold or sell (short or otherwise) any security. The information is provided with the understanding that Optimized Investments, Inc. and ETFOptimize.com are not acting in a fiduciary capacity and no individual advice on investing is offered. ETFOptimize.com does not have knowledge of any reader's specific investment objectives, financial situation, or the needs of any particular person who may view this material, nor may the investments discussed herein be suiable for all types of investors. All opinions, analyses, and information included herein are based on sources believed to be reliable, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. While ETFOptimize undertakes significant effort to ensure that the information provided is accurate, it does not warrant the accuracy, completeness, correctness, ability, or fitness for a particular purpose of the information. ETFOptimize undertakes no obligation to update previously published opinions, analysis or information provided should conditions change. You should independently verify all information obtained. If you are not sure if Exchange Traded Funds, algorithmic/rules-based investing, a particular investment approach is right for you, or if investment or other professional advice is required, you are urged to consult with a Registered Investment Advisor (RIA). Neither this website nor anyone associated with producing its content represents themselves to be Registered Investment Advisors, and no attempt is made herein to substitute for personalized, professional investment advice. Premium content subscribers assume the entire risk and cost of any investment and/or trading decisions they undertake. As part of the premium package, the ETFOptimize content may include results and analysis obtained from backtesting trading algorithms on historical data. Please note that hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors. Simulated trading programs, in general, are also subject to the fact that they are designed with the benefit of hindsight. ETFOptimize makes no representation that any particular equity or strategy will or is likely to achieve profits or losses similar to those represented by the premium models herein. Past investment performance may not be indicative of future returns. Neither ETFOptimize.com, Optimized Investments, Inc., nor its employees, service providers, associates, or affiliates are responsible for any losses you may incur as a result of using the information provided. Investing in publicly traded securities is inherently risky. Please see the site's Terms and Conditions for important additional information and disclaimers.