Risk Profile: Conservative/Moderate Growth and Income
The CMG Managed High Yield Bond Program (“Managed HY Bond”) trades high yield mutual funds and ETFs using a proprietary quantitative buy/sell/hold model. The model identifies opportunities where the short-term and intermediate-term direction of the U.S. high yield market can be predicted with high probability. The strategy looks at daily data such as price, volume, yield spreads and default rates to identify trends.
How it works
- The strategy looks at price movement and current yields to measure and manage risk. The strategy uses price to generate buy and sell signals.
- It is a disciplined rules-based tactical trading strategy designed to minimize economic risk and interest-rate risk. On sell signals, the strategy moves to cash or cash equivalents (risk protection).
- Managed HY Bond trades mutual funds and ETFs to broaden diversification and minimize individual credit risks.
- Trading mutual funds and ETFs also mitigate liquidity risks inherent in buying individual bonds. We believe these types securities offer the broadest, most cost-effective exposure.
Investment Objective: Capital appreciation and Income
Suggested Portfolio Positioning: Serves as a complement to a client’s traditional fixed income portfolio
Suggested Allocation: Typically representing 10-25% of a client’s total portfolio
Benchmark: Fixed Income Benchmark — (60% BBgBarc US Corporate High Yield TR Index and 40% BBgBarc US Treasury Bill 1-3 Month TR Index)
Morningstar Peer Group: Non-traditional Bond
*No inverse or leveraged ETFs are used.
Past performance is no guarantee of future returns.
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