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Our Strategy Profile (preview) pages provide investors with a preview of the actual performance of our Premium Strategies that is updated weekly. Many of the charts and tables in this Profile page are a duplicate of the same tables and charts you will find in your Premium Strategy (subscription) page after you register. After registering for the Premium (subscription) Strategy for this model, you'll get full details of Current Holdings, Closed Positions, and recent Transaction information – and regular updates of our award-winning market and investing research.
Click here to register for this model and begin getting these consistent gains today – without the psyche-devastating losses that can destroy your portfolio for years afterwards (during the 2008-2009 Financial Crisis, the S&P 500 ETF (SPY), which includes America's most well-known companies, required five full years to recover the -56% loss and return to its October 2007 high). Meanwhile, none of the ETFOptimize models experienced a loss during the Financial Crisis—in fact, our models provided an average return of 366% during those five long years when buy-and-hold investors had dead money that earned nothing.
With an Annualized Return of 38% since inception for the Adaptive Equity+ Rotation (2 ETF) Strategy, this model produces a total return that is more than quadruple the total return for a buy-and-hold of the SPDR S&P 500 ETF (SPY) during the same period (July 1, 2007 to present). Since its inception, the Adaptive Equity+ Rotation (2 ETF) Strategy has been 100% profitable – in 13 of 13 years.
Note: This model uses LEVERAGED ETFs when conditions are robustly bullish accompanied by low volatility.
*European investors may not be able to purchase the ETFs in our models unless US ETFs been approved by their broker.
Combined with very low average annual Maximum Drawdown of just -14%, our Adaptive Equity+ Strategy has a
very high Risk Adjusted Return (Sortino ratio) of 2.25!
Our Adaptive EQUITY+ (2 ETF) Strategy has demonstrated accelerating performance over time, and has produced higher-and-higher returns with each passing year. For example, the model has recorded a 35% AR since inception (compared to 8.35% for the S&P 500), a 174% Annualized Return for the last three years (compared to 40% for the S&P 500).
One explanation for the increased results of this model in recent years comes from the growth and availability of higher-performance ETFs, making the strategy better able to select the optimum ETFs for conditions. In fact, the number of ETFs from which we select has grown from 213 at inception to 1,637 today.
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1) Results Summary
2) Strategy Description
3) Key Statistics Summary
4) Performance Charts
5) Financial Crisis Performance
6) Risk Measurements
7) Benefits of This Strategy
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The most recent update of the information on this page was:
Friday, December 4th, 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.
Note: All portfolios were launched with $10,000, and without additions or withdrawals from the account.
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Our Adaptive Equity (2 ETF) Rotation Strategy dynamically combines the two optimum Equity-based ETF assets (from a 1,637-ETF universe). These two high-performance ETFs combine with seasonal hedging to produce a very high-return, low-volatility portfolio that consistently provides you with exceptional returns during virtually any type of market situation.
Universe: This strategy consistently rotates its two holdings into the optimum two ETFs at any given time, continuously adjusting for conditions – whether markets are bullish, bearish, or sideways. The two ETFs are selected from a universe of 1,637 standard-long Equity ETFs and eleven 2x leveraged-long Equity ETFs. There are no 3x-leveraged ETFs or inverse ETFs used in this strategy. The Universe of 1,637 ETFs is based on the Merrill Edge Select™ ETFs by Merrill Lynch (with additional criteria) as determined by a satisfactory volume in the underlying holdings, stability, and continuity.
Selection: Both market timing and ETF-selection are based on an advanced, rules-based composite-assessment system, consisting of as many as 38 different data sets using macroeconomic, fundamental-stock, investor-sentiment, and technical indicators. Each weekend, the system analyzes and compares millions of bits of data to make its choices. Positions are held an average of 1.65 months. Besides a highly sophisticated, adaptive selection system, this robust weekly review of massive quantities of data is what consistently sets the performance of our systematic, quantitative investment strategies head-and-shoulders above the performance of discretionary investors – whether self-guided amateurs or seasoned professionals.
Loss-prevention: When conditions become sufficiently bearish at any time of the year, the strategy exits Equities ETFs and holds two cash-proxy ETFs (BIL, SHY), thereby eliminating the risk of significant loss of capital. The result is very high returns with minimal risk (the Sortino Ratio since inception is 2.30 and in the last three years is 3.45, compared to about 0.70 and 1.25, respectively, for the S&P 500).
Seasonal Hedging: The strategy also includes an automated assessment to determine if hedging is appropriate against seasonal volatility. If conditions are bearish during the volatile summer months (May-August) or October, holdings are restricted to defensive Equity ETFs (such as XLP, XLU, GLD, IYH, etc.) or Fixed Income ETFs based on a weekly assessment of macroeconomic and market conditions.
Results: Hedging by using more conservative universes and more conservative timing signals during the summer months and October results in dramatically improved performance during these historically very volatile periods. As a result of a very sophisticated approach, this Premium Strategy delivers dramatic performance – which has accelerated in recent years – and minimal drawdowns. The Annual Return since Inception is about 38%, which, in the last three years, has increased to more than 50% AR.
Our abbreviated name for this strategy is: EQUITY+.
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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
Weighting: 50% in 2 Equity-based ETFs or hedge with Cash-Proxy ETFs (SHY, BIL)
Nearest Benchmark: SPDR S&P 500 ETF Trust (SPY)
(Higher is better)
Total Return since Inception (July 2007): 5,174%
Benchmark (SPY) Total Return since 2007: 166.61%
Strategy Annualized Return (avg. per year since 2007): 35.28%
Benchmark (SPY) Annualized Return since 2007: 8.24%
Financial Crisis & Recovery Return: 475% (see "Financial Crisis Performance' below)
Percentage of Winning Trades: 60.85%
Biggest Winner / Biggest Loser: 40.13% / -31.00%
Winning Trades Held for an average of: 37 days
Losing Trades Held for an average of: 27 days
Average Position Hold Time (all): 33 days (about 1.7 months)
(Lower is better)
Strategy's Number of Profitable Years: 13 of 13 (100%)
Strategy's Number of Years Outperforming S&P 500 (SPY): 11 of 13 (100%)
Strategy's Average Annual Max Drawdown** (AAMDD): -13.88%
Benchmark's Average Annual Max Drawdown** (AAMDD): -14.34%
Benchmark's (SPY) Max Drawdown: -56%
Strategy's Standard Deviation: 22.99%
Strategy's Annualized Alpha (outperformance of benchmark): 30.96% (34.55% in last 3 years)
(Measured by the Sharpe and Sortino ratios, higher is better)
Sharpe Ratio - Since Inception: 1.46 (Compare to Benchmark at 0.55)
Sharpe Ratio - Last 3 Yrs: 2.33 (Compare to Benchmark at 1.00)
Sortino Ratio - Since Inception: 2.30 (Compare to Benchmark at 0.71)
Sortino Ratio - Last 3 Yrs: 3.47 (Compare to Benchmark at 1.24)
(Our abbreviated name for this strategy is "EQUITY+")
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For all data above: *Past performance is not necessarily indicative of future returns. **Average Annual Max Drawdown (AAMDD) is the average of the worst peak-to-trough drawdowns each year since inception, which we believe is the best representation of the worst declines you might experience as a subscriber in any given year. We also provide the Maximum Drawdown (MDD) figures, which are the very worst drawdown instance that has occurred since inception.
A smooth, steadily climbing performance chart: As you can see from this chart that runs from the strategy's inception on July 1, 2006 to present, the Adaptive Equity+ Strategy provides a steady and consistent, upward ascent of its equity curve. The Adaptive Equity+ Strategy consistently identifies the market's regime – whether economic conditions are in expansion or contraction – and determines the most appropriate set of two Equity ETFs – or Cash-Proxy ETFs during contractions – for current conditions. This continuous assessment of conditions and rotation of positions keeps your investment funds growing month after month, year after year.
With a compound annual growth rate of about 37%, this easy-to-use, 2-ETF strategy outperforms (631%-times) the average return of its benchmark (the SPDR S&P 500 ETF, SPY), and according to data provided by Morningstar, outperforms 100% of mutual funds since inception. Since inception on July 1, 2006, the Adaptive Equity+ Strategy has outperformed its benchmark every year since inception and has NEVER EXPERIENCED A MONEY-LOSING YEAR.
The Adaptive Equity+ Strategy's performance is shown by the red line while its benchmark, the SPDR S&P 500 ETF (SPY), is represented by the blue line.
KEY: The blue line shown as the benchmark is a buy-and-hold of the SPDR S&P 500 ETF (SPY).
The red line shows the ADAPTIVE EQUITY+ (2 ETF) STRATEGY performance since inception.
KEY: The blue line shown as the benchmark is a buy-and-hold of the SPDR S&P 500 ETF (SPY).
The red line shows the ADAPTIVE EQUITY+ (2 ETF) STRATEGY performance for the last two years.
The Adaptive Equity+ (2 ETF) Strategy continues to show accelerating performance with each passing year, with a 38% AR since inception, a 55% Annualized Return for the last two years, and an 70% Annualized Return for calendar year 2019.
KEY: The red line shows the ADAPTIVE EQUITY+ (2 ETF) STRATEGY performance for the Year-to-Date (YTD).
The blue line shown as the benchmark is a buy-and-hold of the SPDR S&P 500 ETF (SPY).
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To demonstrate how this strategy minimizes risk and transforms market losses into your portfolio gains, the best example we can provide is the model's performance 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 -55% of its value. Meanwhile, the ETFOptimize Adaptive Equity+ (2 ETF) Strategy consistently switched to the two optimum ETFs for all conditions and outperformed the market by an enormous margin.
This story is best demonstrated by the Chart below:
The Chart below shows the entirety of the wild tale – from the beginning of the Financial Crisis through the Recovery – for five long years, from the October 9, 2007 high until October 8, 2012 – when the benchmark finally recovered the -55% loss it suffered during the worst recession in 75 years. By the time the SPDR S&P 500 ETF (SPY) benchmark got back to breakeven (0%) after five long years of 'dead money,' our Adaptive Equity+ (2 ETF) Strategy had produced a return of 475% for subscribers – with an Annualized Return over those five years of 42%.
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. The model provides a very steady equity curve and allows users to ignore the market and live stress-free.
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CALENDAR-YEAR BAR CHART
Yearly Performance Bar Chart: This chart tracks each strategy's performance for each calendar year since inception. You can see in the chart below that the performance of the Adaptive Equity+ Strategy (red bars) has been profitable every year (indicated by red bars being above 0%), and in 13 of 13 years, the strategy (red bars) outperformed its S&P 500 benchmark (indicated by the strategy's red bars extending above the benchmark's blue bars).
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This table shows the Adaptive Equity+ Strategy Strategy's trade-statistic record since inception.
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One of the most important measures of the effectiveness of an investment approach is its
Risk-Adjusted Return, commonly measured by the Sharpe Ratio or Sortino Ratio. These metrics show the ratio of an investment's performance to its volatility. The Sharpe Ratio measures performance against all volatility, while the Sortino Ratio measure performance against downside volatility only. Investors are prone to making emotionally based, injurious decisions when volatility gets high, so the industry has labeled this factor as 'risk.' A strategy with a high Risk-Adjusted Return is one that provides excellent upside performance with low volatility.
Notice the dramatic outperformance of this strategy when
those two ratios are compared to the strategy's benchmark - a buy-and-hold of the SPDR S&P 500 ETF (SPY). Since the inception of this strategy, the Sharp Ratio of SPY is 0.56 while its Sortino Ratio is 0.72 – compared to an exceptional Sharpe ratio of 1.52 and Sortino Ratio of 2.34, respectively, for the Adaptive Equity+ (2 ETF) Strategy.
You can also see from the last entry on the bottom-right side of the table showing Alpha % (average annual outperformance of a portfolio compared to the performance of its benchmark) that this strategy outperforms its benchmark by an average of more than 30% per year! The actual, year-by-year outperformance is shown in the "Performance Stats - Yearly" table (above).
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STEADY PROFITS: By combining two equity-based ETFs, the Adaptive Equity+ (2 ETF) Strategy provides low-volatility, consistent outperformance regardless of market conditions, accompanied by vastly reduced drawdowns. With an Annual Return of about 39%, an average annual Maximum Drawdown of just -14%, the Adaptive Equity-Plus Strategy rewards users with consistent, continuous positive returns.
HIGH RISK-ADJUSTED RETURN (RAR): The Adaptive Equity+ Strategy's Sortino Ratio of 2.33 since inception is one of the highest Risk-Adjusted Returns of all our strategies, and it has an even higher Sortino Ratio of 3.47 in the last three years. We generally use the Sortino Ratio as an indicator of Risk-Adjusted Return, because it measures the ratio of strategy's upside appreciation to its downside volatility – which is the risk factor about which nearly all investors are most concerned.
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ROBUST GAINS DURING BOTH RALLIES AND DOWNTURNS: The combination of two optimum equity ETFs, selected from a universe of 1,073 well-vetted equity ETFs, provides you with performance that can be double the return of the market during bull rallies, and even producing gains during market downturns. The Adaptive Equity+ Strategy produced a return of 540% during the Financial Crisis and its recovery – during a span that the S&P 500 produced return of 0% – 4-1/2 long years that the average investor had no appreciation of their savings – i.e., dead money. Yet the Equity+ Strategy provided an average Annualized Return of 40% at a time when the S&P 500 was experiencing and recovering from a -56% drawdown!
With our May 2019 revision, when significant market declines occur, this strategy offers a powerful defense by switching to a pair of high-volume, short-term Treasury ETFs (SHY and BIL) that serve as proxies for cash. During the volatile summer months when market volume significantly declines, this strategy switches away from more aggressive and leveraged ETFs to a conservative set of equity ETFs. This approach reduces the strategy's volatility and provides lower annual drawdowns at a time when the market is prone to low-volume swoons. The Equity-Plus Strategy provides investors with an approach that can profit no matter which direction the market is headed – always with a smooth, upward trajectory.
UNEMOTIONAL, EFFICIENT INVESTMENT DECISIONS: Using an unemotional, mathematically driven trading system enables you to ignore the financial media, with its click-bait pessimistic market outlooks, coffee-amped TV talking heads, 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 should occur, details of your strategy's performance for the last week, month, year, and since inception.
You get a comprehensive set of performance, trade and risk 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 little risk of losing money in any given year.
EASY TO USE: The ETFOptimize investment strategies minimize the number of trades needed to attain their high performance, with an average of 3.83 months between trades. The Equity+ is Strategy is our most aggressive model and trades a bit more often, with an average hold time of 33.73 market sessions (about 1.7 months). When a transaction occurs, you receive straightforward details for trades 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.
Each of the ETFs in the universes from which our models select has been carefully reviewed for tradability, with a rating of 5 out of 5 from FactSet for an investor's ease of trading a $1 million block. ETFs don't trade like stocks, and you should avoid looking at the daily volume for guidance on an ETF's tradeability. What matters most is the volume of the underlying stocks in the index upon which the ETF is based. The ETFs in our universes have ample underlying volume in their constituent's stocks, and you should never have a problem when making trades of $1 million or less.
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 – and with minimal risk. For investors, this can be the "Holy Grail" – a simple, proven investment approach that produces gains through both bull markets and bear markets alike.
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An average Sharpe ratio of 1.50 and an average Sortino Ratio of 2.21 consistently rank our strategies atop the lists of highest risk-adjusted return of any mutual fund, professionally managed portfolio, or quantitative investment models available to investors today. Why not put this steady stream of investment profits to work for you starting today?
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