Managers & Models

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