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Optimal Equity & Defensive (4 ETF) Combo Strategy


 

This Strategy Profile page provides you with an information-rich introduction to our Equity & Defensive Combo (4 ETF) Strategy  (aka, "Equity/Def-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 on this Preview Page, you can 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.

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 for this model by clicking this link or any of the light-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) Preventing Losses with Defensive ETFs

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 most recent update of the information on this page was:

Sunday, August 9th, 2020

Strategies are updated each week by 12-noon (EST) on Sunday. We will announce any delays.
Trades should be filled at midday on Monday (or Tuesday if Monday is a market holiday).

Copyright © 2020 Optimized Investments, Inc., all rights reserved.





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

Smooth, steadily climbing performance: As you can see from the charts below, the Optimal Equity & Defensive (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, and Last 2-Years.

With an Annualized Return of about 30% since Inception, the performance is exceptionally good for any investment approach, but when you consider that this model has an Annualized Return near 45% for both the last 2 Years and the last 12 Months, and also an Annualized Return of 96% for the Year-to-Date (YTD) 2019, this model's performance is even more impressive.

Combined with very low average annual Maximum Drawdown of just -14%, the Equity+ Strategy has a
Risk Adjusted Return (Sortino) of 2.36!

Since its inception, the Optimal Equity++ & Defensive (2 ETF) Combo Strategy 
has been profitable in 13 of 13 years (100%), and beat the 70%-30% SPY /BND Benchmark in 13 of 13 years (100%).






Performance Chart – Since Inception
(January 1, 2007 - Present)

The Equity-Fixed (4 ETF) Combo Strategy has an Annualized Return of 31% from its inception-to-present with an ann 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 394% return while its benchmark (a SPY/BND combo) worked all that time just to get back to breakeven.

This strategy has produced a performance that's 18-times (1,800%) the performance of the SPDR S&P 500 ETF (SPY) in the 13-years since the strategy's inception in 2007. A $100,000 investment at the model's inception would be worth more than $2.8 million today (13 years later), while that same $100k would be valued at only $266k if it were invested in the S&P 500. That's an ENORMOUS difference that's made available when using an ETFOptimize systematic investment strategy!

 

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


KEY: The red line shows the "Optimal Equity/Fixed InDefensive Combo Strategy's" performance since inception.
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 Optimal Equity-Fixed (4 ETF) Combo Strategy has Total Return of more than 180%. Meanwhile, the stock market has been in a sidways pattern and has gained very little over the same span.

As the market has flattened and floundered in the last few years, the EQ/DEF-4 Combo Strategy kept investors safe – with a 50% Return over the last two years, outperforming its benchmark by 30%.

 

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


KEY: The red line shows the "Optimal Equity/Defensive (4 ETF) Combo Strategy's" performance for the last 2 Years.
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 advantage of combining four ETFs from two uncorrelated asset classes (Equity and Defensive ETFs) is that you receive a significant reduction of volatility with only slightly lower performance, thereby delivering investors with a dramatically increased Risk-Adjusted Return. This strategy provides the highest Sharpe Ratio (a measure of Risk-Adjusted Return) of all our strategies, at 1.68. Its Sortino Ratio (another measure of Risk-Adjusted Return) is a sky-high 2.54. A high Risk-Adjusted Return implies an excellent return relative to risk-free investments – combined with exceptionally low volatility – which many consider to be the proverbial holy grail of investing.

With a compound annual growth rate of more than 28%, this two-asset-class, 4-ETF combination strategy produces a Total Return of more than 16-times (1672%) 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 the mutual funds tracked over the last 3, 5, and 10 year periods.  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.*

The Optimal Equity/Defensive (4-ETF) Combo Strategy has an Alpha of 23.57% per year!

 

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For a limited-time only, we are offering this strategy at the introductory price of just $24/mo or $240/yr.

Try It for 60 Days – Satisfaction Guaranteed or Your Money-Back!

Why not register now and put this exciting investment model to work for you today? Choose either monthly at the introductory price of just $24 – or get TWO additional months FREE by registering for the 1-year subscription at just $240 – we think you'll agree it's money spent prudently – a product that easily pays for itself every year. Always remember, your subscription is backed by our 100%, 60-day Money-back Guarantee so you have ZERO risk to get started now.

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

 

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

Strategy Description


Our "Optimal Equity & Defensive (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 Defensive - for a total of four positions held simultaneously in a 70%-30% ratio (majority weighting placed on the ETFs from our 'Equity/Defensive++' Strategy).

The Equity/Defensive++ 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 Proshares 2x S&P 500 ETF (SSO), or Proshares 2x NASDAQ 100 (QLD) – which are utilized during extended, robust bull markets when underlying economic and market conditions are exceptionally favorable (there are no 3x-leveraged ETFs or inverse ETFs used).

 

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Likewise, the Defensive System Component selects two ETFs from a universe of 53 carefully selected bond and other Defensive ETFs. (See below for details on these two Universes. The Defensive 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 Defensive) with a total of 1,458 ETFs (vs. 265 previously) and a significantly improved set of selection algorithms. The Equity/Defensive (4 ETF) Strategy combines two Equity (70% weighting) and two Defensive (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 Defensive 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 Defensive 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 second highest Risk-Adjusted Return, with a Sortino ratio of 2.48 since inception and 2.39 in the last 3 years (compared to 0.85 and 0.84, respectively, for this model's benchmark).


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


Data sources: Performance Statistics; Portfolio123,
Standard & Poors Global Market Intelligence, Compustat, S&P Capital IQ, St. Louis Federal Reserve.


Inception: July 1, 2007
Rebalance Frequency: Weekly
Average Position Hold Time: avg. 130 market sessions (about 6.5 months)

(Avg. of 42 days for the Equity++ 2-ETF holdings and 218 days for the Defensive 2-ETF holdings)
Weighting: 4-ETF Combination ( 70% in 2 Equity++ ETFs, and 30% in 2 Defensive ETFs)
Nearest  Benchmark: 70% Equity ETF (SPY) / 30% Total Bond Market ETF (BND) Combination


(NOTE: the Defensive components of the Equity++ (2 ETF) Strategy and the Defensive (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 Equity ETFs provided by our subscription Equity+ Strategy.)

PERFORMANCE
Annualized Return (since inception): 28.72%
Last 12 Month's Return: 14.25% (8.66% for 70/30, Equity/Defensive benchmark)
2019 Return: 70.20%
(31.09% for 70/30, Equity/Defensive benchmark)
Last 3 Year's Return: 181.67% (vs. 39.04% for 70/30, Equity/Defensive benchmark)
STRATEGY Total Return since Inception: 2,474.39% (30.93% Annualized Return)
BENCHMARK Total Return since Inception: 147.91%
Financial Crisis & Recovery Return: 408% (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 13 Years
Number of Years Outperforming the Benchmark: 13 of 13
Strategy's
Avg. Annual Max Drawdown (AAMDD): -11.28%**
Benchmark's Avg. Annual Max Drawdown (AAMDD): -14.98%
Strategy's
absolute Max Drawdown (MDD): -19.21%% (in 2020)
Benchmark's Max Drawdown (since inception): -40.37% (in 2008-2009)
Standard Deviation: 15.87%
Annualized Alpha: 24.01%

RISK-ADJUSTED RETURN (Higher is better)
Sharpe Ratio - Since Inception: 1.65  (Compare to Benchmark at 0.66)
Sharpe Ratio - Last 3 Yrs: 1.46  (Compare to Benchmark at 0.65)
Sortino Ratio - Since Inception: 2.45  (Compare to Benchmark at 0.85)
Sortino Ratio - Last 3 Yrs: 2.23 (Compare to Benchmark at 0.84)

(Our abbreviated name for this strategy is "Equity/Defensive-4" or "EQ/DEF-4")

Make This Performance Yours!

*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 & Defensive (2 Asset, 4 ETF) Combo Strategy



Two Uncorrelated Components Provide Robust Performance

Investment outperformance is a double-edged sword if your portfolio isn't protected on the downside when the market begins a selloff. The Optimal Equity & Defensive (4 ETF) Strategy provides that protection—accompanied by exceptional upside performance.

Many investors use an aggressive investment approach that produces excellent performance when the market is rallying – unfortunately, many have also lost all those profits (and perhaps more) when conditions turn negative. Whatever was fueling the outperformance to the upside is just as powerful in creating losses when conditions reverse and a quick selloff strikes.

Fortunately, both of the components of the Optimal Equity & Defensive (4 ETF) Strategy provide ample protection from loss before the market begins declining – while also offering uncorrelated performance during upside rallies. Neither the Equity component nor the Defensive component of this model (as separate portfolios) have ever lost money during any year since inception, and provide an even more robust investment performance when combined into the 2-Asset, 4-ETF configuration of this model.

When challenging market conditions arise that cause the typical stock portfolio or mutual fund to decline, this strategy's Equity-based component (dubbed 'EQ/DEF++') will switch to a 'risk-off' mode – selling its long, bullish Equity positions and moving to Defensive ETFs.

These defensive positions can either be cash-proxy ETFs (such as SHY or BIL) if risk increases dramatically. If risk has not increased dramatically and conditions are just 'challenging' with stocks still heading higher overall, then it will employ what we call Bullish-Defensive ETFs, including defensive sector ETFs such as XLP (Staples), XLU (Utilities), XLV (Healthcare), and other non-traditional defensive-equity ETFs like MOAT, DEF, DVY, QUAL, USMV, MNA and more. Meanwhile, the Defensive Component is always rotating-to and holding the two Defensive ETFs that are optimum for conditions.

The conservative, 2-ETF, Defensive component of this 4-ETF strategy consists primarily of Bond and Fixed-Income-based ETFs (Corporate, Municipal, and Treasury bond ETFs), 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 all of our model's use of Exchange Traded Funds (ETFs).

The two Defensive 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 Defensive (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 Defensive (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 greater than -6% since inception, and only one – in mid-2009 – slightly crossed the -10% threshold (see the lower window of the chart below).


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Optimal Equity & Defensive (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/Defensive-4 ETF 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/Defensive-4 Strategy also puts to use). Meanwhile, the ETFOptimize Equity/Defensive-4 Strategy consistently switched to the four optimum ETFs (two Equity and two Defensive 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 shows the S&P 500 from the 2007 high to the 2009 low.  These developments began at the October 9, 2007 market high just before the downturn began, until the lowest point – at the stock market trough of the Financial Crisis on March 9, 2009. Our Optimal Equity/ Defensive (4 ETF) Strategy risk-timing system signaled for the selling of the long-equity components just before the downturn began and the Defensive components took over, producing 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/ Defensive (4 ETF) Strategy had produced a return of 408% 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 Low – From its October 9, 2007 high before the Financial Crisis began – to its low on March 9, 2009 – the SPDR S&P 500 ETF (SPY –the blue line in the chart above) lost -55%. Meanwhile, our Optimal Equity/ Defensive (4 ETF) Combo Strategy gained 6.70%.

Our EQ/DEF-4 Strategy is a combination of two models, a 2-ETF Equity++ Strategy Component (weighted 70%) and a 2-ETF Defensive Strategy Component (weighted 30%). During the first 18 months of the Financial Crisis, the Equity Component switched to defensive ETF positions while our Defensive component rotated to the best bond-market ETFs – and provided a positive return of + 6.70% - which is a 62% outperformance of the S&P 500 ETF (SPY).

  During the entire Financial Crisis & its Recovery – this strategy's benchmark (using a 70%-30%-weighted SPY/BND combination) descended from its October 9, 2007 high (just before the Financial Crisis began) through its low on March 9, 2009, losing -55%. Then, as shown in the chart above, the benchmark began to gain ground and over a total of 37.5 months (until November 28, 2012), it finally recovered that -55% loss.

However – as shown in the chart and data above – our Optimal Equity/ Defensive (4 ETF) Combo Strategy produced a total return of 408% and an Annualized Return of 39% – gaining ground throughout the entire process, which was a disaster for 95% of investors in the world. Which investment approach do you think will serve you better when the next severe market downturn begins?

 

Eliminating significant market declines – and the recovery time required – is one of several ways this ETFOptimize Premium 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 Defensive ETF, which produces a very steady equity curve and allows users to ignore the market and live stress-free.


Make Downturns Profitable!

 



Optimal Equity & Defensive (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/ Defensive (4 ETF) Strategy can sit back and just ignore all that noise. The eq-def-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/ Defensive (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 eq-def-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 eq-def-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/Defensive-4 Strategy over its Benchmark on the bottom line.



Calendar Year Performance Statistics


Never a Money-Losing Year

From the top line of the chart above, you can see that the Optimal Equity/Defensive+ (4 ETF) Strategy provided positive annual returns for every calendar year since its inception in mid-2006 with an average return of about 27%. The bottom line shows that the EQ/DEF-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/ Defensive (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 & Defensive (2 Asset, 4 ETF) Combo Strategy

Risk Measurements

 

Since the inception of the Optimal Equity/Defensive (4 ETF) Strategy, it has FAR MORE than doubled the Sharpe and Sortino Ratios of its Benchmark ('since-inception' metrics are shown in the lower table below). The Sharpe Ratio and Sortino Ratio (listed near the middle of each table) are the most-used measures of an investment's Risk-Adjusted Return (RAR) – which is an investment's overall performance compared to its volatility. Higher performance combined with lower volatility results in higher risk-adjusted returns.

The Risk-Adjusted Return measure is a vital investment metric because (for example) most people would be excited to have an investment that returns 50% in a year, but they might think twice if that investment had wild swings – both higher and lower – of 100% to -100% during that year. Because of those wild swings (a.k.a. volatility), that investment would probably have a very low Risk-Adjusting-Return – and all but the most fearless investors would likely avoid it.

Comparing the Risk-Adjusted Return of various investments, usually by employing their Sharpe Ratio or Sortino Ratio, is a way to determine which investment approach has the optimum return per comparable unit of volatility. In this case, you can compare the Sharpe and Sortino Ratios of the ETFOptimize models to the Sharpe and Sortino Ratios of their benchmarks, the S&P 500, or any other investment of your choice.


Risk Measurements
(*Note: Data is updated every weekend.)

 

 The ETFOptimize strategies are specifically designed to reduce drawdowns and volatility while maximizing upside performance. Therefore, you can logically assume – and you would be correct – that the ETFOptimize Investment Strategies have exceptionally high Risk-Adjusted Returns. Each model was designed to attain exceptionally high performance, but equally important is avoiding return-destroying drawdowns. That's why we like to think that achieving our record-level Risk-Adjusted Returns comes naturally – it's in the ETFOptimize DNA.

 Moreover, our Optimal Equity/Defensive (4 ETF) Combo Strategy
has the highest Risk-Adjusted Return of any of our strategies!

 

*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 an exceptional absolute performance and record-level risk-adjusted-returns.


 

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

Strategy Universes

This two-component, combination strategy combines our Equity++ (2 ETF) Strategy and our Defensive (2-ETF) Strategy, in a weighting of 70%-30%, respectively. (Sorry, neither of these models are available as a stand-alone subscription.) Note that the Equity++ Strategy (a 70% component in this model) is different from the Adaptive Equity+ (2 ETF) Strategy.

Each of the two asset-class components has a separate universe with 1,490 ETFs in the Equity Universe and 53 ETFs in the Defensive 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.

However, remember that ETF trading volume is not comparable to the trading volume of stocks; ETFs and individual corporate stocks are two entirely different animals. For example, when a recommendation is made to a large number of subscribers by a small-capitalization stock newsletter, all that volume in one direction can move the price of that small company's shares. If the newsletter has a large number of subscribers, some unscrupulous marketmakers or trade participants will actually manipulate or front run every trade recommended. However, that will never be the case with an ETFOptimize recommendation because Exchange Traded Funds (ETFs) were created in the early 1990s with a design that resolves this potential problem.

Here's the difference between volume considerations for ETFs and stocks: 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 stocks in 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 1,409-ETF Universe of Long Equity ETFs and a 11-ETF Universe of Leveraged-Long Equity ETFs to comprise a total 1,420 ETF Equity universe and a 52 ETF Defensive 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.


DEFENSIVE ETF COMPONENT

The Defensive Rotation algorithms select the optimum position for conditions from a 53-ETF Defensive Universe consisting of Corporate Bond ETFs, Treasury Bond ETFs, and other Defensive-based ETF asset configurations. The 53 Defensive 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 Defensive 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.

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Optimal Equity & Defensive (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/ Defensive (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 Defensive 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 Defensive 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 Defensive ETF that moderates out any excessive turbulence. The eq-def-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 across all models, there are 3.83 months between trades. For this strategy (Equity/Defensive-4), the average hold time is 106 business days or about 5.3 months for all positions. The Equity++ Component ETFs are held 3.22 months and the Defensive Component ETFs are 6.54 months, on average.

When a transaction occurs, you receive straightforward documentation of the trade so you can quickly execute it with the enry of the ticker and the click of a button at your broker's website. For investors who want to become more familiar with each position, we provide a you link to complete background data and the latest news articles for each ETF used by your 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 & Defensive (4 ETF) Combo Strategy



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2) 'Insights™ - the Systematic Investor's Resource'   Premium-Strategy subscribers get first access to our award-winning, data-driven Insights™ market reports when they are released – well ahead of the 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 weekly market reports, and you'll get that information long before non-subscribers or media outlets have an opportunity to access the same information.  Insights™ takes a deep dive into our proprietary indicators and what they reveal when they signal a change in the market. These indicators include the most predictive macroeconomic measures, fundamental stock factors, market-internal breadth indicators, and sophisticated technical signals – always accompanied by easy-to-understand charts and tables.


3) '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 access to that valuable information. Our 'Inside Secrets of Investing' blog offers investors insightful content that isn't discussed in our macroeconomic/fundamental analysis sections, including ETF-related news, evergreen investment articles, and rarely-mentioned tips from experienced insiders who have more than 50 years of combined investing experience – helping you attain and maintain phenomenal investment performance.


4) 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. Each of the ETFOptimize quantitative strategies overweight the factors that help our models avoid drawdowns, i.e. temporary financial losses – which are the number one cause of poor long-term investment performance.

The ETFOptimize Premium Strategies have never recorded a money-losing year since inception – that's 77 out of 77 consecutive winning years. With an average Sharpe ratio of 1.50 and an average Sortino Ratio of 2.21, our models consistently rank atop any list of the highest Risk-Adjusted Returns available to investors today. Why not put a steady stream of investment profits to work for you starting right now?

As provided by our 60-day Money-Back Satisfaction Guarantee detailed below, you have no risk whatsoever to get started with your strategy subscription. Your subscription is protected by a 100% Money-Back Guarantee – demonstrating our confidence that you'll love your model and the results it delivers! Join the thousands of investors who have benefited from the ETFOptimize systematically driven investment models since 1998 and begin getting consistent win after win from your investment dollars!




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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 & Defensive (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.