Tactical ETF

Objective

The Tactical ETF Portfolio strategy is designed to be actively managed in order to dynamically take advantage of short to intermediate term opportunities within global capital markets.  The overall objective of this strategy is to produce superior risk-adjusted returns versus a broad equity market index.  We strive to accomplish this objective through pursuing dynamic exposure to a broad array of asset classes, including global equities, commodities, global fixed income and cash.

Strategy & Process

The portfolio is structured to utilize exchange traded funds (ETFs) as the primary investment vehicles for exposure to the various asset classes.  ETFs are highly efficient in providing relatively low-cost, pure indexed exposure to either broad asset classes or even concentrated exposure to sub-asset classes and sectors.

At Smith Capital we believe that profitable investment opportunities abound within global capital markets regardless of the broad market direction.  Our research has found that many of these opportunities come about due to the influence of extreme investor psychology on securities prices.  We utilize the Smith Capital Tactical Allocation Decision process to guide the portfolio positioning into areas of attractive undervaluation with emerging momentum and to hedge against or even short asset classes that appear overvalued and exposed to excessive risk.  In our endeavor to be nimble and maximize profits while minimizing losses, we also employ technical analysis of an ETF’s price pattern to time the optimal entry and exit points.

The Smith Capital Allocation Engine is a proprietary quantitative model that incorporates multiple econometric, market psychology, and asset class relative valuation variables to derive an integrated allocation model.  This forms the basis for the overall capital allocation decisions.  Additionally, we conduct rigorous qualitative analysis of the global economy, market cycles, and macro themes which affect asset classes, sectors and industries, along with technical analysis to identify trends, cycles and turning points in the various global asset classes.  We call this whole research endeavor the Tactical Allocation Decision Process.

Advisory Structure

The Smith Capital Tactical ETF Portfolio is periodically implemented as a separate account sub-set strategy within the context of Smith Capital clients’ overall wealth steward portfolios and mandates.

We also manage the portfolio strategy as a pure single mandate for select individual and institutional clients.  The strategy is implemented and managed through separate accounts individually registered under each client, and where each account is custodied by a third-party custodian.  Smith Capital LLC does not take possession of or maintain custody of any clients’ assets.