Financial Trust’s Tactical Toolbox™ suite of strategies aims to provide investors with dynamic equity and fixed income exposure by utilizing a tactical overlay that adjusts each strategy’s risk profile based on current market conditions. The tactical overlay generates a signal based on a form of technical analysis known as volume-price analysis, which is conducted on each strategy’s associated “Signal Generating ETF”. Depending on the signal for each segment, the overlay will shift funds to either a 90 or 10 percent equity allocation within that particular segment. The remaining funds are invested according to Financial Trust’s Flexible income strategy, a global fixed income portfolio constructed with ETFs that aims to reduce interest rate risk by keeping overall portfolio duration in a low range.
For comparison purposes, the benchmark for each tactical strategy is a blend of the associated equity component benchmark with a weight of 60% (see equity component descriptions for the appropriate benchmark) and the Bloomberg Barclay’s 1-5 Year Government/Credit Index with a weight of 40%. The component benchmark weights are rebalanced monthly.
Each tactical strategy and its underlying equity component strategy and signal generating ETF are listed in the table below.
| Tactical Strategy | Equity Component | Signal Generating ETF |
|---|---|---|
|
Tactical American Disciplined Equity™ |
American Disciplined Equity |
SPDR S&P 500 ETF (SPY) |
|
Tactical American Disciplined Mid Cap |
American Disciplined Mid Cap |
SPDR S&P Midcap 400 ETF (MDY) |
|
Tactical American Disciplined Small Cap |
American Disciplined Small Cap |
iShares Core S&P Small-cap ETF (IJR) |
|
Tactical American Leaders |
American Leaders |
iShares S&P 100 ETF (OEF) |
|
Tactical Asia ValueMomentum |
Asia ValueMomentum |
iShares Asia 50 ETF (AIA) |
|
Tactical Disciplined Dividend Income™ |
Disciplined Dividend Income |
SPDR S&P 500 ETF (SPY) |
|
Tactical Europe ValueMomentum |
Europe ValueMomentum |
iShares Europe 50 ETF (IEV) |
|
Tactical International Leaders |
International Leaders |
iShares MSCI ACWI ex US Index ETF (ACWX) |
|
Tactical International ValueMomentum |
International ValueMomentum |
iShares MSCI ACWI ex US Index ETF (ACWX) |
|
Tactical Latin ValueMomentum |
Latin ValueMomentum |
iShares Latin America 40 ETF (ILF) |
|
Tactical ValueMomentum Leaders™ |
ValueMomentum Leaders |
SPDR S&P 500 ETF (SPY) |
Note: Within the tactical strategies, the composition of the Flexible Income portion of the portfolio may deviate slightly from the stand-alone Flexible Income strategy due to trading issues, turnover management, and other considerations.
Tactical Benchmarks
| Tactical Strategy | Benchmark* |
|---|---|
|
Tactical American Disciplined Equity |
60% S&P 500 Index / 40% Bloomberg Barclay's 1-5 Year Government/Credit Index |
|
Tactical American Disciplined Mid Cap |
60% S&P Midcap 400 Index/ 40% Bloomberg Barclay's 1-5 Year Government/Credit Index |
|
Tactical American Disciplined Small Cap |
60% S&P Smallcap 600 Index/ 40% Bloomberg Barclay's 1-5 Year Government/Credit Index |
|
Tactical American Leaders |
60% S&P 100 Index/ 40% Bloomberg Barclay's 1-5 Year Government/Credit Index |
|
Tactical Asia ValueMomentum |
60% MSCI AC Asia Pacific Index Net/ 40% Bloomberg Barclay's 1-5 Year Government/Credit Index |
|
Tactical Disciplined Dividend Income |
60% S&P 500 Index/ 40% Bloomberg Barclay's 1-5 Year Government/Credit Index |
|
Tactical Europe ValueMomentum |
60% MSCI Europe Index Net/ 40% Bloomberg Barclay's 1-5 Year Government/Credit Index |
|
Tactical International Leaders |
60% MSCI All Country World Index ex US Large Cap Net/ 40% Bloomberg Barclay's 1-5 Year Government/Credit Index |
|
Tactical International ValueMomentum |
60% MSCI AC World Index ex US Net/ 40% Bloomberg Barclay's 1-5 Year Government/Credit Index |
|
Tactical Latin ValueMomentum |
60% MSCI Emerging Markets Latin America Index Gross/ 40% Bloomberg Barclay's 1-5 Year Government/Credit Index |
|
Tactical ValueMomentum Leaders |
60% S&P 500 Index/ 40% Bloomberg Barclay's 1-5 Year Government/Credit Index |
Tactical Global Cash Flow
The Tactical Global Cash Flow Strategy is a mixture of the following tactical strategies ran as a single model:
- Tactical American Leaders
- Tactical Disciplined Dividend Income
- Tactical International Leaders
- Tactical Global REIT ***
For comparison purposes this portfolio is measured against a blend of 60% MSCI All Country World Index (net of withholding taxes) and 40% Bloomberg Barclays 1-5Yr Government/Credit Index rebalanced monthly.
Note: When a signal for a particular component of the Tactical Global Cash Flow goes negative, Financial Trust at its discretion, may use representative ETFs for the long only equity component for that particular segment of the strategy. This may be done in order to prevent small position sizes. The representative equity ETFs will be the same as the signal generating ETFs listed above.
***The Tactical Global REIT Strategy is a mixture of two component strategies, Financial Trust’s Global REIT (GREIT) and Flexible Income strategies. The model switches between two sets of allocations determined by a signal given by a tactical overlay based on Volume‐Price Analysis of the SPDR Dow Jones Global Real Estate ETF (RWO). If the tactical overlay gives a bullish signal, the strategy allocates 90% of funds into the GREIT strategy and 10% into the Flexible Income strategy. On the other hand, if the overlay gives a bearish signal, the strategy allocates 10% of funds into the GREIT strategy and 90% into the Flexible Income strategy. NOTE: The Tactical Global REIT Strategy is NOT managed as a standalone model. It is only implemented as a part of the Tactical Global Cash Flow Strategy.
*Please see benchmark descriptions.