innealta capital


The Tactical ETF Portfolios

New Solutions for a New Investment Landscape

The SelectOne Tactical ETF Solutions move money between and within certain asset classes depending upon current risk-adjusted returns for the various components of the portfolio strategy you select.

The SelectOne platform offers 6 distinct Tactical ETF Portfolios through Innealta Capital.

Risk Based

  • Three diversified strategic portfolios for varying risk tolerances
  • Equity exposure within each portfolio can deviate by +/- 20% relative to the strategic asset allocation target

fixed Income

  • Tactically invests in fixed income sectors that have strong risk-adjusted performance potential and eligible exchange traded fund representation
  • Quantitative framework that ensures the portfolio's level yield, modified duration, and volatility are objectively controlled

sector rotation

  • Tactically alters equity exposure across the 10 U.S. industry sectors, based up the quantitative model
  • 10 S&P GICS Sectors

country rotation

  • Tactically invests in up to 20 international markets, based up the quantitative model
  • 28 possible countries, including several emerging markets

The SelectOne Tactical ETF Risk Based Portfolios

investment process:

  • Develop Strategic Asset Allocation: Three diversified strategic portfolios are developed using a blend of asset allocation technologies, including mean variance optimization within the resampling and Black-Litterman frameworks.
  • ETF Selection: ETFs are selected for each asset class in the strategic model.
  • Apply Tactical Asset Allocation: A tactical overlay to the strategic ETF-based portfolios. Bullish or bearish signals generated by the quantitative model are used to adjust equity exposure within each portfolio by +/- 20% relative to the long term strategic asset allocation target in order to try to capture enhanced risk-adjusted returns.

The SelectOne Tactical ETF Fixed Income Portfolio

The portfolio aims to generate above-average yield with strict risk controls by investing in those fixed income sectors that Innealta believe(s) have favorable risk-adjusted performance potential and eligible ETF representation. The portfolio is operated within a quantitative framework that seeks to objectively control the portfolio's level yield, modified duration, and volatility. The process starts with the collection of daily information of constituent sectors. This enables the close monitoring of the fixed income universe as it is represented within the ETF space. This information is then incorporated into the quantitative framework so that Innealta can try to algorithmically control both risk and yield. The framework is implemented as frequently as necessary in order to help capitalize on potential investment opportunities as they arise. The frequency of the framework can be implemented daily and no less than quarterly.

Potential ETFs:

The SelectOne Tactical ETF Sector Rotation Portfolio

The portfolio aims to generate high total return with strict risk controls by consistently investing in those sectors of the U.S. economy that have strong risk-adjusted performance potential. The portfolio is run by a multifactor model that evaluates the risk/reward profile of each sector in the portfolio on a daily basis, responding to market movements as they affect various sectors and industries. The strategy is binary: the portfolio is either entirely in or out of a sector at any given time. Each sector is modeled independently and its risk/reward profile is compared to an equal investment in an intermediate-term U.S. Treasury. If the expected return per unit of risk for the sector is more favorable than that of an intermediate-term U.S. Treasury, the portfolio will invest in the sector, and vice versa. When the quantitative modeling is bearish on a sector, that sector's 10% capital is deployed to the fixed income portfolio, which is actively managed in terms of duration and credit quality. Sectors are equally weighted.

Potential ETFs:

The SelectOne Tactical ETF Country Rotation Portfolio

The SelectOne Tactical ETF Country Rotation Portfolio The portfolio aims to generate high total return with strict risk controls by consistently investing in countries with strong risk-adjusted performance potential. The portfolio is run by a multifactor model that evaluates the risk/reward profile of each country in the portfolio on a daily basis, responding to dynamically changing global economies. The strategy is binary: the portfolio is either entirely in or out of a country at any given time. Each country is modeled independently and its risk/reward profile is compared to an equal investment in an intermediate-term U.S. Treasury. If the expected return per unit of risk of a country is more favorable than that of an intermediate-term U.S. Treasury, the portfolio will invest in the country, and vice versa. When the quantitative modeling is bearish on a country, that country's 5% capital is deployed to the fixed income portfolio, which is actively managed in terms of duration and credit quality. Countries are equally weighted.

Potential ETFs:

Innealta Capital
32392 Coast Highway, Suite 260 Laguna Beach, CA 92651
Phone: 888-994-6827
www.innealtacapital.com

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