Artifex Folios

Durable Investment Portfolios Customized to Your Goals

AFG Hedge (Updated 2/18/2016)

November 30, 2012

The goal of the AFG Hedge portfolio is to provide an investor with a basket of non-correlated, low-volatility holdings to offset the higher fluctuations realized in the equity markets and with a secondary objective of replacing some of the characteristics of the bond market with an asset class that has similar historical risk and return statistics (but with possibly less of the risk of the current fixed income markets).

Alternative / Hedge portfolios as an asset class are varied and difficult to define.  Examples are  precious and industrial metals, timber, agriculturals, mining companies, managed futures, hedge funds, long-short funds, opportunistic equity, deep-value equity, turnaround situations, buyout candidates, merger arbitrage, venture capital, private equity and real estate.  The two traits that alternative portfolios tend to share is an emphasis on alpha generation (through the experience and skill of the manager) and a tendency to provide returns that are either risk-offsetting or return-enhancing (or both).  Assets in these types of portfolios also tend to be good hedges against inflation.

A simple diagram of Alternative Assets is provided here:

Our Hedge model is designed to take advantage of both non-correlated and return-enhancing holdings.  We believe that virtually every investor’s portfolio should have some exposure to this important asset class.

The inception date of this model is 5/26/2010 and it has generated a total return of 32.52% vs. the IQ Hedge Multi-Strategy Tracker ETF of 19.46% since that date.  This model’s 1Y return (01/01/2016-12/31/2016)  was .64% vs. the benchmark index return of .74%.

Model Risk Metrics as of 1/18/2017:

Beta vs. S&P 500: 0.84 / Below Average

Volatility / Absolute Risk: 12.23% / Below Average

Dividend Yield: 4.66%

 Representative Holdings:

BX - Blackstone Group

GURU - Global Top X GURU

REZ - iShares Residential Real Estate

 

MOM - QuantShares US Market Neutral Momentum

 

Sign up to receive our blog posts

Recent Posts

Artifex Folios Portfolio Information

Click for the BBB Business Review of this Financial Planning Consultants in Dayton OH