Thrive amid the shifting tides of your financial landscape

The dynamic asset level investing process

The tactical portfolio decisions our team makes utilize the point and figure research and evaluation technique of Dorsey, Wright & Associates – an institutional research group with extensive expertise in point and figure charting. This type of analysis attempts to evaluate the supply and demand forces of particular asset classes then ranks them from strongest to weakest based upon relative strength.

In the financial markets, asset class performance is compared daily to determine which are the strongest or weakest. This ranking process – dynamic asset level investing – comprises four steps.

Asset classes can be ranked similarly to sports teams. When ranking teams based upon how well they perform against their opponents, the more games, matches or races won, the higher ranked the team becomes.

  • We first create a list of members for each segment within the asset classes selected to include in our portfolios. For example in the international equity space, all areas of the world are represented from Europe and Latin America to Australia and Asia to help ensure that no one segment within an asset class has too great an influence.

  • Each member on the list has a score, which is compared against all other members being evaluated. In essence, a competition is held to see which is the strongest. After all individual calculations are computed and charted on a point and figure basis, each member now has its number of relative strength wins.

  • The total number of wins for each individual member of the asset class is added together to calculate a composite score for the entire asset class. The asset classes are then ranked from one to five, and include domestic equities, international equities, commodities, currencies and fixed income.

  • The top two ranked asset classes are eligible to be emphasized in dynamic asset level investing, but they must pass one last hurdle. These asset classes are each compared to cash on a point and figure relative strength basis. If cash is stronger, it will be emphasized in the portfolio and is the only asset class that can occupy both of the top spots.

Dedicated to providing our clients with objective, unbiased investment advice, our team created and manages four relative strength portfolios for those who prefer to leave the decision-making to us. Invested in exchange traded funds (ETFs) and actively managed funds, each of our diversified portfolios seeks to pursue an appropriate balance between long-term capital appreciation and capital preservation.

With a proprietary allocation designed to overweight market areas exhibiting the greatest relative strength and seeking to avoid those with the weakest, our portfolios accommodate various risk tolerances by adjusting exposure to various asset classes in each portfolio. Since emotions and investing biases are historically detrimental to superior long-term portfolio performance, we employ a disciplined and systematic investment strategy to help remove these elements and focus on tactical diversification and defined risk objectives within the portfolios. Overall, our portfolios strive to exceed their strategic benchmarks with less volatility.

  • We do not rebalance on a systematic basis – as market leadership changes, so do our portfolios.

    • Growth
    • Conservative Growth
    • Growth & Income
    • Income

  • Our portfolios are built around a targeted, proprietary asset allocation and invest in six broad asset classes.

    • Domestic equity
    • International equity
    • Fixed income
    • Foreign currency
    • Commodities
    • Cash

  • Within our portfolios, each asset class is represented by one of five strategies, ranked on a relative strength basis and designed to adapt to changing market conditions over time.

    • Domestic sector rotation
    • Domestic style rotation
    • International country rotation
    • Fixed income style rotation
    • Alternative asset rotation

There is no assurance that any investment strategy will achieve its objectives. The process of rebalancing may result in tax consequences.

Investors should consider the investment objectives, risks, and charges and expenses of exchange traded funds carefully before investing. The prospectus contains this and other information about these funds. The prospectus is available from Tumlin Levin Sumner Wealth Management and should be read carefully before investing.

Dorsey, Wright & Associates is not affiliated with Raymond James.