The strategy underlying the Relative Sentiment Tactical Allocation ETF comprises four steps:
- Determine the "risk-on" (i.e., equity) allocation using an ensemble of longitudinal relative sentiment indicators
- Partition that "risk-on" allocation between U.S. and developed market equities using cross-sectional relative sentiment indicators
- Identify whether macro conditions are ripe for gold using dollar relative sentiment and the trajectory of real interest rates
- Allocate the remainder of the portfolio to TIPS and/or nominal bonds based on retail macro sentiment related to inflation expectations
- The fund takes a long-only approach and uses no leverage or derivatives
- It recomputes its allocations weekly and rebalances when the allocations have drifted beyond a threshold
- It expresses its allocations using liquid, low-cost, broad-market ETFs.