Smart Sector® US Equity with Catastrophic Stop


As the market and economy cycles mature, some advisors are looking for ways to continue to participate in the late-stage rallies, while securing protection against a potential economic recession and what it might mean for stocks.

Day Hagan/Ned Davis Research Smart Sector® US Equity with Catastrophic Stop is a hybrid investment strategy that combines active sector allocation with risk management. The strategy seeks to enhance returns over a buy-and-hold equity benchmark by overweighting and underweighting S&P 500 sectors based on Ned Davis Research's proprietary sector model. The strategy also seeks to mitigate the effects of major market declines by reducing equity market exposure using Ned Davis Research's Catastrophic Stop model.

The Catastrophic Stop model is a time-tested, objective model that combines multiple indicators to identify periods of high risk for the broad U.S. equity market. If the Catastrophic Stop model is triggered, the strategy reduces its equity exposure by 50%. When the Catastrophic Stop model moves back to bullish, the strategy returns to being fully invested.

The Day Hagan/Ned Davis Research Smart Sector® US Equity with Catastrophic Stop strategy is implemented through sector ETFs and may be a good option for investors who are:

  • Looking for a more active approach to equity investing
  • Wanting to manage risk exposure
  • Seeking diversification across multiple sectors and industries

Source: Ned Davis Research, Inc.



The representations and opinions of Day Hagan and Ned Davis Research herein are their own and are not the opinions or views of Freedom Advisors. The information is believed to be reliable but is neither guaranteed by Freedom Advisors nor any of its affiliates. Freedom Advisors, Day Hagan and Ned Davis Research are not affiliated. Freedom Advisors does not provide tax or legal advice.

Performance figures for individually listed third-party models are for illustrative purposes only and do not reflect the platform fee. A side-by-side comparison of net and gross performance for the models reflected in this document is available on the Freedom Advisors platform. Past performance is not indicative of future results.


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