AAA Defensive Mode Paying Dividends

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I designed my Active Asset Allocator investment strategy to deliver a consistent level of positive returns over time with a strong focus on capital preservation. It has required significant patience to remain defensively positioned throughout 2015 but that decision is starting to pay dividends now. The Sell signal generated in October 2014 is still active. A break in the S&P 500 below 1,867 (3% below today's level of 1,922) will likely trigger an increase in selling pressure. We remain in full defensive mode for now, 20% equities / 30% bonds / 30% gold / 20% cash.

 
 

Trend Change: 15th October 2014

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Trend Change: 15th October 2014

Our Technical Trend Indicator has triggered its first sell signal in over a year and right on queue, stock market volatility has picked up dramatically. Our model portfolio is already defensively positioned due to our concerns about the this ageing equity bull market. Now is not a time to swing for the fences. Capital preservation is always our primary goal.

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Technical Trend Indicator: 24th September 2014

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Technical Trend Indicator: 24th September 2014

How useful has the Technical Trend Indicator (TTI) been as a market timing tool? Very useful it turns out; the TTI has proven to be an excellent barometer of the overall market trend and has caught many of the large inflection points in the stock market over the last seven years as shown in the chart below. The TTI drives the asset allocation decisions taken in Active Asset Allocator Model, which has delivered a 12% per annum return since inception with less risk than the average multi-asset fund.

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