Target Volatility Models

Building Portfolios for Individualized Volatility Tolerance

Philosophy Behind Target Volatility:

By investing in lower volatility investments, a portfolio can be designed to meet both growth and risk objectives while simultaneously insulating portfolios during times of severe market turbulence. Lower volatility investments historically lose less value during market declines, while still participating in the upside of market rebounds.

Overview of Target Volatility Models:

Target Volatility portfolios utilize a modeling process to identify and select the investment allocations needed to meet the ideal volatility exposure of the individual investor. A score is assigned to indicate a client’s optimal exposure to market volatility. This Target Volatility score represents an investor’s ideal exposure to market volatility as related to the benchmark index, which is typically the S&P 500. These models minimize exposure to drastic market fluctuations while sustaining productive market participation. They also provide a more consistent investment experience for tax-and fee-efficiencies.

Portfolios are comprised of 5 to 10 ETFs and/or mutual funds across a variety of asset classes that collectively work to meet the investor’s Target Volatility, which is typically less volatile than a comparative benchmark index. Investments within a portfolio are reallocated at least quarterly, or at a frequency determined by our client.

Investor Profile for Target Volatility:

Designed for investors seeking returns at a reduced level of exposure to market volatility. These investors typically invest for the long-term, desire a level of protection in market participation for a more consistent investment experience. They are also more conscious of tax and fee considerations.

We can build custom Target Volatility Models for our clients, or we can provide signals for some our favorite Target Volatility Model Indexes.

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