S&P 500 SECTOR SELECTION STRATEGY
Providing exposure to the S&P 500 Index through a value-based, macro-economic approach, this strategy is intended to outperform the Index while maintaining lower than market volatility.
Sectors stances are determined by relative attractiveness, as well as characteristics that provide exposure to our forecast drivers of return. Through this process we seek to express our long-term macro-view, while also gaining exposure to longer term positive return factors.
A FACTOR-BASED FOUNDATION
Similar to smart-beta strategies, we begin by strategically determining sector weighting based on objective factors as opposed to market cap. We aim to avoid large allocations toward already large sectors of the Index potentially overvalued, and instead look to overweight exposure of factors such as value, dividend yield and low volatility. Long-term in scope, the goal is to enjoy the tailwind of these favorable factor exposures.
ADDING A MACRO-OVERLAY
This strategy is not strictly rule-based; instead, we leverage Hillswick's macro-economic process to develop a long-term forecast aimed to protect the strategy from our determined macro-economic risks. This added overlay is constructed to provide manager discretion to help sidestep the typical pitfalls of a factor-based strategy, such as a value trap.
Some macro-economic sector considerations involved in sector positioning include:
- Sector share of GDP overtime
- The power of mean reversion
- Sector events with long-term implications
For more information on our managed equity strategies, including performance numbers and pertinent risk metrics, please contact using the form below. We look forward to hearing from you.