How Tactical Tilt Products Minimize Risks



Market Realist: I’d like to speak about how you were acquired by Nasdaq. How have  investors benefited from this acquisition?

Tom: Nasdaq brings credibility to Dorsey Wright. I think that for probably half of the tenure of DWA, we had five people here. And then we grew to 20 people, but that’s all we’ve ever had. Nasdaq has a very large global presence. We are now in a different ballgame – the Big League.

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Market Realist: Where do you see the smart beta universe headed and the total AUM, and where do you see Nasdaq fitting into that?

Tom: We’re already changing the landscape of smart beta. We’ve developed two ETFs with risk management embedded into the fund. Now the advisor does not have to take it upon himself or herself to raise cash due to market fluctuations as the product will already raise cash inside the wrapper, so we are already taking smart beta into a whole new realm. In this new realm, you have everything locked up into one wrapper.

Or, you can even take our tactical tilt product. This product embraces modern portfolio theory and DWA’s philosophy of relative strength. In my opinion, this is the final solution where a total portfolio, no matter how large, can be managed in one wrapper with a rules-based system. We will continue creating more unique products that make it easier for the advisor to use and easier for compliance to accept.

Market Realist’s View: Tactical tilt products minimize risks

The DWA Tactical Tilt portfolios seek to balance risk management demands and wealth accumulation needs for investors using six macro asset classes in a dynamic fashion.  The portfolio can be positioned offensively during risk-on market trends and afforded flexibility to conversely “Tilt” in a more defensive manner during risk-off situations.

As the graph above shows, an example offensive environment using a Moderate Tactical Tilt Strategy could invest up to 75% toward equities and as little as 20% toward bonds. In a defensive environment, by contrast, the same portfolio could allocate up to 75% toward non-equity investments (Cash, Bonds and Alternatives) in an effort to preserve wealth during potential bear markets.


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