Our Models

Adaptive ETF Models

Drawbridge offers investors cutting edge ETF strategies that provide upside AND downside risk protection. Our proprietary algorithms are based on leading academic research and blend a variety of factors designed for consistent performance, year after year.

The Drawbridge Balanced strategy is a new twist on this classic strategy.  Rather than hold the entire stock market, the strategy takes advantage of both U.S. style rotation as well as international stocks.  In a similar fashion, the strategy selects among the best fixed-income opportunities by rotating among treasuries and high yield bonds.

The strategy uses  Drawbridge’s Downside Risk Protector© in an effort to protect capital during periods of market weakness.

The result is a strategy that has historically provided investors with a significantly lower drawdown and a higher risk-adjusted return making it a suitable strategy for a wide variety of investor needs.

  • Monthly rebalance
  • Holds a maximum of 2 ETFs per period
  • No negative return years
  • May hold cash to protect a portfolio from loss

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The objective of the Cornerstone Income II model is to seek steady income while protecting capital. It does this by using a tactical allocation of four separate models: Duration, Credit Quality, Dividends, and Alternative Income.

Each of these models is designed to provide income in different market conditions. All bonds and income-producing investments typically do not have similar correlations to each other. By separately evaluating the different investments, the model is designed to choose the top-performing investments each month.

These four models are then combined based on their weighted risk-adjusted returns with our Downside Risk Protector© which is designed to minimize risk and maximize gains.

  • Monthly rebalance
  • Holds a maximum of 5 ETFs per period
  • Focus on income securities
  • May hold cash to protect a portfolio from loss

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Focus Four is a global, rules-based tactical ETF model with the objective of long-term capital appreciation while minimizing risk.

The model ranks 14 ETFs in different asset classes including U.S. stocks, International and Emerging Markets, Real Estate, Commodities, Gold, U.S. Treasuries, Corporate, High Yield, and International bonds.

Focus Four uses a dual-ranking system based on the underlying risk of the asset class. This process helps to reduce the volatility of the model.  The ETFs are separated by risk, then ranked.  The top ETFs from each system are chosen for investment.

Using our Downside Risk Protector©, the model will move into cash or short-term securities during down markets which helps minimize risk and maximize gains.

  • Monthly rebalance
  • Holds a maximum of 4 ETFs per period
  • “All Asset” approach
  • May hold cash to protect a portfolio from loss

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The Keystone Global Allocation model consists of a rules-based approach, investing globally across a diversified universe of ETFs representing multiple asset classes.  The model has an absolute return focus with the intent to minimize risk and maximize gains in all market conditions.

The goal of the model is to serve as the foundation for a diversified portfolio, ideal for both retirement and long-term financial planning.  The model is flexible enough to hold significant cash or fixed-income positions when risk is high and be fully invested when conditions warrant.

The model is composed of eight separate models representing multiple asset classes:  U.S. Sector Rotation, U.S. Style Rotation, International, Emerging Markets, Credit, Real Estate, Commodities, and Defensive.  Each of these models is allocated 12.5% of the model portfolio.

The model can be fully invested in up to 14 ETFs when market conditions are favorable but also has the flexibility to be fully invested in cash or short-term securities during down markets by using our downside risk protector© strategy.  

  • Monthly rebalance
  • Holds a maximum of 14 ETFs per period
  • “All Asset”, multi-strategy approach
  • May be considered as a total-portfolio solution
  • May hold cash to protect a portfolio from loss

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The U.S. Sector Rotation model rotates among the top-performing sector and industry ETFs.
 
The economy operates in cycles, and at any given time, some sectors of the market may be up while others may be down.  By investing in the best performing sectors and avoiding the worst, investors can maximize growth during positive market environments.

The model examines over 20 different sector-specific SPDRs and iShares and then selects the top three ranked ETFs for the model.  This model uses our downside risk protector

© to move into cash and short-term investments to protect the portfolio during down markets.

  • Monthly rebalance
  • Holds a maximum of 3 ETFs per period
  • Sector/Industry-specific
  • May hold cash to protect a portfolio from loss

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The style of equity investments is determined by size and value/growth characteristics. During the market cycle, different investment styles rotate in and out of favor.  The U.S. Style Rotation model attempts to take advantage of this rotation by using a rules-based approach to determine the top two ETFs to invest in from a basket of U.S. style ETFs.

During down markets, the model uses our downside risk protector© to invest in cash or short-term securities.  This allows for growth potential while managing risk.

The three company capitalization sizes – Small Cap, Mid Cap, and Large Cap – combined with Growth, Value, and Blend, or Core, create the nine different styles of companies.

  • Monthly rebalance
  • Holds a maximum of 2 ETFs per period
  • Stylebox-specific
  • May hold cash to protect a portfolio from loss

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The Vanguard ETF Conservative model blends a strategic allocation approach within a dynamic risk protection methodology.  

The initial portfolio is built using the Vanguard’s CRSP series of ETFs distinguished by their tracking of broad market domestic stock indexes from the University of Chicago’s Center for Research in Security Price (CRSP).   

The Conservative strategy allocates 80% to short, intermediate, long-term, mortgaged-backed, and international fixed income securities.  The remaining 20% is allocated among domestic growth, value, and small-cap equities as well as FTSE Developed Markets and FTSE Emerging Markets.   

From there, the strategy tracks each ETF using two separate algorithms, each independent of the other.   Each is designed to move any ETF that is underperforming compared to a “low risk” alternative ETF, to safety.   

For investors, this provides the benefit of having a known strategic allocation with the comfort of knowing that every ETF is independently protected with our Dynamic Downside Risk Protector®  It’s like investing with a safety net.   

  • Monthly rebalance
  • Holds a maximum of 10 ETFs per period
  • “All-asset” approach
  • May be considered as a total-portfolio solution
  • May hold cash to protect a portfolio from loss

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The Vanguard ETF Moderate model blends a strategic allocation approach within a dynamic risk protection methodology.  

The initial portfolio is built using the Vanguard’s CRSP series of ETFs distinguished by their tracking of broad market domestic stock indexes from the University of Chicago’s Center for Research in Security Price (CRSP).   

The Moderate strategy allocates 50% to short, intermediate, long-term, mortgaged-backed, and international fixed income securities.  The remaining 50% is allocated among domestic growth, value, and small-cap equities as well as FTSE Developed Markets and FTSE Emerging Markets.   

From there, the strategy tracks each ETF using two separate algorithms, each independent of the other.   Each is designed to move any ETF that is underperforming compared to a “low risk” alternative ETF, to safety.   

For investors, this provides the benefit of having a known strategic allocation with the comfort of knowing that every ETF is independently protected with our Dynamic Downside Risk Protector®  It’s like investing with a safety net.   

 

  • Monthly rebalance
  • Holds a maximum of 10 ETFs per period
  • “All-asset” approach
  • May be considered as a total-portfolio solution
  • May hold cash to protect a portfolio from loss

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The Vanguard ETF Growth model blends a strategic allocation approach within a dynamic risk protection methodology.  

The initial portfolio is built using the Vanguard’s CRSP series of ETFs distinguished by their tracking of broad market domestic stock indexes from the University of Chicago’s Center for Research in Security Price (CRSP).   

The Moderate strategy allocates 20% to short, intermediate, long-term, mortgaged-backed, and international fixed income securities.  The remaining 80% is allocated among domestic growth, value, and small-cap equities as well as FTSE Developed Markets and FTSE Emerging Markets.   

From there, the strategy tracks each ETF using two separate algorithms, each independent of the other.   Each is designed to move any ETF that is underperforming compared to a “low risk” alternative ETF, to safety.   

For investors, this provides the benefit of having a known strategic allocation with the comfort of knowing that every ETF is independently protected with our Dynamic Downside Risk Protector®  It’s like investing with a safety net.   

  • Monthly rebalance
  • Holds a maximum of 10 ETFs per period
  • “All-asset” approach
  • May be considered as a total-portfolio solution
  • May hold cash to protect a portfolio from loss

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quantitative stock models

Investors can find a range of models designed around factors such as quality, growth, value, momentum, and sentiment.  Additionally, most models include automatic downside protection.   

Utility companies are traditionally a favorite sector of investors due to their large dividend yields and perceived low risk.  The low risk comes from the high demand for utilities based on a decreased competition as a result of government regulation.  However, not all utility companies are great investments and there may be times when they fall out of favor.

This system includes evaluating the companies’ fundamentals using a robust ranking system which allows the model to recommend an optimum time to buy or sell the stock.  Also included in the model are rules to minimize correlation among the portfolio holdings.

  • A systematic approach to individual stocks
  • Disciplined buy and sell rules
  • Weekly rebalancing

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This model uses the Dividend Aristocrat index as a base.  The index is comprised of 50 stocks from the S&P 500 that have at least 25 years of increasing dividends.

The goal of the Dividend Aristocrat stock model is to hold the 10 most undervalued stocks in the index.  The criteria for selection include having the highest dividend yield.  Then the model examines stocks that have large high yields when compared to their 5-year returns.  Then we add two complex ranking systems to determine the buy selections.

Although the goal of the model is to hold 10 stocks, the positions aren’t forced.  When fewer stocks meet the rules, the model will select less than 10 positions in which case the model will hold cash.

  • A systematic approach to dividend-paying stocks
  • Disciplined buy and sell rules
  • Weekly rebalancing

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The Small-Cap Growth model focuses on fast-growing small-cap companies that are experiencing rising earnings with upward revisions in analyst estimates.

The minimum market cap is set at $50 million with $200 million of daily turnover.  The model’s technical rules identify rising trends in both the targeted stocks and the stock market.  No new selections are recommended unless the market is in an uptrend.  The model will hold a maximum of 10 stocks equally weighted.
  • A systematic approach to small-cap stocks
  • Disciplined buy and sell rules
  • Weekly rebalancing

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The Crypto Comrades model is a way to invest in the crypto markets with reduced exposure to the risk of actually owning coins.  
  
The model invests in established companies that are developing processes and/or products in the cryptocurrency field that will benefit from the rise in this emerging market. 

The goal of the Crypto Comrades model is to outperform the S&P 500 index while reducing volatility and downside risk in cryptocurrency.

  • A systematic approach to individual stocks
  • Disciplined buy and sell rules
  • Semi-monthly rebalancing

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